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What changed in CBAK Energy Technology, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CBAK Energy Technology, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+324 added−269 removedSource: 10-K (2024-03-15) vs 10-K (2023-04-14)

Top changes in CBAK Energy Technology, Inc.'s 2023 10-K

324 paragraphs added · 269 removed · 224 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

93 edited+37 added−22 removed77 unchanged
Biggest change(All amounts, other than percentages, in thousands of U.S. dollars) Years Ended Change December 31, December 31, 2021 2022 $ % Net revenues $52,670 $248,725 196,055 372 Cost of revenues (47,559 ) (230,630 ) (183,071 ) 385 Gross profit 5,111 18,095 12,984 254 Operating expenses: Research and development expenses (5,274 ) (10,635 ) (5,361 ) 102 Sales and marketing expenses (2,302 ) (2,008 ) 294 -13 General and administrative expenses (10,027 ) (9,738 ) 289 -3 Impairment charge on long-lived assets - (4,832 ) (4,832 ) n/a Impairment charge on goodwill - (1,556 ) (1,556 ) n/a Recovery of (provision for) doubtful accounts 780 (831 ) (1,611 ) -207 Total operating expenses (16,823 ) (29,600 ) (12,777 ) 76 Operating loss (11,712 ) (11,505 ) 207 -2 Finance income, net 785 491 (294 ) -37 Other income (expense), net 3,644 (7,252 ) (10,896 ) -299 Impairment of Non-marketable equity securities (693 ) - 693 -100 Change in fair value of warrants liability 61,802 5,710 (56,092 ) -91 Income (loss) before income tax 53,826 (12,556 ) (66,382 ) -123 Income tax credit 7,733 1,228 (6,505 ) -84 Net income (loss) $ 61,559 (11,328 ) (72,887 ) -118 Less: Net (income) loss attributable to non-controlling interests (73 ) 1,879 1,952 -2,674 Net income (loss) attributable to shareholders of CBAK Energy Technology, Inc. 61,486 $ (9,449 ) (70,935 ) -115 Net revenues .
Biggest change(All amounts, other than percentages, in thousands of U.S. dollars) Year Ended December 31, Change 2022 2023 $ % Net revenues $ 248,725 $ 204,438 (44,287 ) -18 % Cost of revenues (230,630 ) (172,714 ) 57,916 -25 % Gross profit 18,095 31,724 13,629 75 % Operating expenses: Research and development expenses (10,635 ) (11,928 ) (1,293 ) 12 % Sales and marketing expenses (2,008 ) (4,904 ) (2,896 ) 144 % General and administrative expenses (9,738 ) (13,789 ) (4,051 ) 42 % Impairment charge on property, plant and equipment (4,832 ) (7,070 ) (2,238 ) 46 % Impairment charge on goodwill (1,556 ) - 1,556 -100 % Provision of expected credit losses (831 ) (1,285 ) (454 ) 55 % Total operating expenses (29,600 ) (38,976 ) (9,376 ) 32 % Operating loss (11,505 ) (7,252 ) 4,253 -37 % Finance income, net 491 433 (58 ) -12 % Impairment charges on equity investee - (2,366 ) (2,366 ) n/a Share of loss of equity investee - (27 ) (27 ) n/a Other expense, net (7,252 ) 3,023 10,275 -142 % Change in fair value of warrants liability 5,710 136 (5,574 ) -98 % Loss before income tax (12,556 ) (6,053 ) 6,503 -52 % Income tax credit (expense) 1,228 (2,486 ) (3,714 ) -302 % Net loss (11,328 ) (8,539 ) 2,789 -25 % Less: Net loss attributable to non-controlling interests 1,879 6,090 4,211 224 % Net loss attributable to shareholders of CBAK Energy Technology, Inc. $ (9,449 ) (2,449 ) 7,000 -74 % Net revenues .
As more businesses and households switch to renewable energy, there has been a growing demand for renewable energy sources and the need for energy storage solutions to support these sources. Additionally, our focus on research and development has allowed us to develop innovative and reliable energy storage products at a competitive pricing.
As more businesses and households switch to renewable energy, there has been a growing demand for renewable energy sources and the need for energy storage solutions to support these sources. Additionally, our focus on research and development has allowed us to develop innovative and reliable energy storage products at competitive pricing.
The net cash provided by operating activities in 2022 was mainly attributable to our net income of $6.9 million (before loss on disposal of property, plant and equipment, impairment charge of long-lived assets, impairment charge of goodwill and excluding non-cash depreciation and amortization, write-down of inventories, share-based compensation and changes in fair value of warrants liability), a decrease of trade and bills receivable of $21.0 million, decrease of prepayments and other receivables of $7.1 million, increase of trade and bills payable by $7.6 million offset by increase of inventories of $24.0 million and increase of trade receivable from BAK Shenzhen of $3.5 million.
The net cash provided by operating activities in 2022 was mainly attributable to our net income of $6.9 million (before loss on disposal of property, plant and equipment, impairment charge of long-lived assets, impairment charge of goodwill and excluding non-cash depreciation and amortization, write-down of inventories, share-based compensation and changes in fair value of warrants liability), a decrease of trade and bills receivable of $21.0 million, decrease of prepayments and other receivables of $7.1 million, increase of trade and bills payable by $7.6 million offset by increase of inventories of $24.0 million and increase of trade receivable from Shenzhen BAK of $3.5 million.
The net cash provided by financing activities for the year ended December 31, 2022 mainly comprised of $21.6 million bank borrowings, $1.5 million from non-controlling interests injections, $1.5 million from finance leases, partially offset by repayment of bank borrowings of $14.6 million, and $3.7 million in repayment of loans to Mr. Ye Junnan.
The net cash provided by financing activities for the year ended December 31, 2022 mainly comprised $21.6 million bank borrowings, $1.5 million from non-controlling interests injections, and $1.5 million from finance leases, partially offset by repayment of bank borrowings of $14.6 million and $3.7 million in repayment of loans to Mr. Ye Junnan.
Exchange Rates The financial records of our PRC subsidiaries are maintained in RMB. In order to prepare our financial statements, we have translated amounts in RMB into amounts in U.S. dollars. The amounts of our assets and liabilities on our balance sheets are translated using the closing exchange rate as of the date of the balance sheet.
Exchange Rates The financial records of our PRC subsidiaries are maintained in RMB. In order to prepare our financial statements, we have translated RMB amounts into U.S. dollars. The amounts of our assets and liabilities on our balance sheets are translated using the closing exchange rate as of the date of the balance sheet.
Upon receipt of the shares, the creditors released the Company from any claims, demands and other obligations relating to the Third Debt and Fourth Debt. 40 On October 10, 2019, each of Mr. Shibin Mao, Ms. Lijuan Wang and Mr. Ping Shen entered into an agreement with CBAK Power and Zhengzhou BAK New Energy Vehicle Co., Ltd.
Upon receipt of the shares, the creditors released the Company from any claims, demands and other obligations relating to the Third Debt and Fourth Debt. On October 10, 2019, each of Mr. Shibin Mao, Ms. Lijuan Wang and Mr. Ping Shen entered into an agreement with CBAK Power and Zhengzhou BAK New Energy Vehicle Co., Ltd.
The 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. 34 Financial Statement Presentation Net revenues.
The 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. Financial Statement Presentation Net revenues.
Equity and Debt Financings from Investors In addition, we have obtained funds through private placements, registered direct offerings and other equity and debt financings: On July 28, 2016, the Company entered into securities purchase agreements with Mr. Jiping Zhou and Mr.
Equity and Debt Financings from Investors In addition, we have obtained funds through private placements, registered direct offerings and other equity and debt financings in the past: On July 28, 2016, the Company entered into securities purchase agreements with Mr. Jiping Zhou and Mr.
Such funds will be used to construct new plants with new production lines and battery module packing lines. Critical Accounting Policies and Estimates Our consolidated financial information has been prepared in accordance with U.S.
Such funds will be used to construct new plants with new production lines and battery module packing lines. 53 Critical Accounting Policies and Estimates Our consolidated financial information has been prepared in accordance with U.S.
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 the Company’s CEO, Mr. Yunfei Li and Mr.
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.
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.
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 (collectively, the “2020 Warrants”), for gross proceeds of approximately $49.16 million, before deducting fees to the placement agent and other offering expenses payable by the Company.
The portion of the warranty reserve expected to be incurred within the next 12 months is included within accrued liabilities and other while the remaining balance is included within other long-term liabilities on the consolidated balance sheets. 46 Government Grants Our subsidiaries in China receive government subsidies from local Chinese government agencies in accordance with relevant Chinese government policies.
The portion of the warranty reserve expected to be incurred within the next 12 months is included within accrued liabilities and other while the remaining balance is included within other long-term liabilities on the consolidated balance sheets. 55 Government Grants Our subsidiaries in China receive government subsidies from local Chinese government agencies in accordance with relevant Chinese government policies.
On January 7, 2023, we obtained a two-year term facility from Postal Savings Bank of China, Nanjing Tianhe 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 the Company’s CEO, Mr. Yunfei Li, Mr. Yunfei Li’s wife Ms.
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.
On November 5, 2020, Tillicum Investment Company Limited entered into an agreement with CBAK Nanjing and Shenzhen ESTAR Industrial Company Limited (the Company’s equipment supplier) whereby Shenzhen ESTAR Industrial Company Limited assigned its rights to the unpaid equipment cost owed by CBAK Power of approximately $$11.17 million (RMB75,000,000) (the “Seventh Debt”) to Tillicum Investment Company Limited. 42 On November 11, 2020, we entered into a cancellation agreement with Tillicum Investment Company Limited.
On November 5, 2020, Tillicum Investment Company Limited entered into an agreement with CBAK Nanjing and Shenzhen ESTAR Industrial Company Limited (the Company’s equipment supplier) whereby Shenzhen ESTAR Industrial Company Limited assigned its rights to the unpaid equipment cost owed by CBAK Power of approximately $$11.17 million (RMB75,000,000) (the “Seventh Debt”) to Tillicum Investment Company Limited.
On January 7, 2019, each of Mr. Dawei Li and Mr. Yunfei Li entered into an agreement with CBAK Power and Tianjin New Energy whereby Tianjin New Energy assigned its rights to loans to CBAK Power of approximately $3.4 million (RMB23,980,950) and $1.7 million (RMB11,647,890) (totaled $5.1 million, the “First Debt”) to Mr. Dawei Li and Mr. Yunfei Li, respectively.
Yunfei Li entered into an agreement with CBAK Power and Tianjin New Energy whereby Tianjin New Energy assigned its rights to loans to CBAK Power of approximately $3.4 million (RMB23,980,950) and $1.7 million (RMB11,647,890) (totaled $5.1 million, the “First Debt”) to Mr. Dawei Li and Mr. Yunfei Li, respectively.
On April 28, 2020, we entered into a third exchange agreement (the “Third Exchange Agreement”) with the Lender, pursuant to which the Company and the Lender agreed to (i) partition a new promissory note in the original principal amount equal to $100,000 (the “Partitioned Promissory Note”) from the outstanding balance of certain promissory note that the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange the Partitioned Promissory Note for the issuance of 312,500 shares of the Company’s common stock, par value $0.001 per share, to the Lender. 41 On June 8, 2020, we entered into a fourth exchange agreement (the “Fourth Exchange Agreement”) with the Lender, pursuant to which the Company and the Lender agreed to (i) partition a new promissory note in the original principal amount equal to $100,000 from the outstanding balance of certain promissory note that the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange the partitioned promissory note for the issuance of 271,739 shares of the Company’s common stock, par value $0.001 per share to the Lender.
On April 28, 2020, we entered into a third exchange agreement (the “Third Exchange Agreement”) with the Lender, pursuant to which the Company and the Lender agreed to (i) partition a new promissory note in the original principal amount equal to $100,000 (the “Partitioned Promissory Note”) from the outstanding balance of certain promissory note that the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange the Partitioned Promissory Note for the issuance of 312,500 shares of the Company’s common stock, par value $0.001 per share, to the Lender.
Our capital expenditures in 2022 were primarily allocated to the construction of our Dalian and Nanjing facilities. The table below sets forth the breakdown of our capital expenditures by use for the periods indicated.
Our capital expenditures in 2023 were primarily allocated to the construction of our Dalian, Nanjing and Zhejiang facilities. The table below sets forth the breakdown of our capital expenditures by use for the periods indicated.
However, because we did not have any assessable income derived from or arising in Hong Kong, BAK Asia and BAK Investment had not paid any such tax. 35 Results of Operations Comparison of Years Ended December 31, 2021 and 2022 The following table sets forth key components of our results of operations for the years indicated, both in dollars and as a percentage of our revenue.
However, because we did not have any assessable income derived from or arising in Hong Kong, BAK Asia, BAK Investment and Nacell Holdings had not paid any such tax. 42 Results of Operations Comparison of Years Ended December 31, 2022 and 2023 The following table sets forth key components of our results of operations for the years indicated, both in dollars and as a percentage of our revenue.
On July 29, 2020, we entered into a seventh exchange agreement (the “Seventh Exchange Agreement”) with the Lender, pursuant to which the Company and the Lender agreed to (i) partition a new promissory note in the original principal amount equal to $365,000 from the outstanding balance of certain promissory note that the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange the partitioned promissory note for the issuance of 576,802 shares of the Company’s common stock, par value $0.001 per share to the Lender.
On July 8, 2020, we entered into certain exchange agreement with the Lender, pursuant to which the Company and the Lender agreed to (i) partition a new promissory note in the original principal amount equal to $250,000 from the outstanding balance of certain promissory note that the Company issued to the Lender on December 30, 2019, which has an original principal amount of $1,670,000, and (ii) exchange the partitioned promissory note for the issuance of 453,161 shares of the Company’s common stock, par value $0.001 per share to the Lender. 50 On July 29, 2020, we entered into a seventh exchange agreement (the “Seventh Exchange Agreement”) with the Lender, pursuant to which the Company and the Lender agreed to (i) partition a new promissory note in the original principal amount equal to $365,000 from the outstanding balance of certain promissory note that the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange the partitioned promissory note for the issuance of 576,802 shares of the Company’s common stock, par value $0.001 per share to the Lender.
If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Trade and Bills Receivable Trade and bills receivable are recorded at the invoiced amount, net of allowances for doubtful accounts and sales returns.
If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. 54 Trade and Bills Receivable and current expected credit losses Trade and bills receivable are recorded at the invoiced amount, net of allowances for doubtful accounts and sales returns.
The increase in sales of batteries for uninterruptable supplies in 2022 can be attributed to a combination of factors including growing demand for renewable energy sources, and our development of reliable and low-cost products.
The increase in sales of batteries for residential energy supply & uninterruptable supplies in 2023 can be attributed to a combination of factors including growing demand for renewable energy sources, and our development of reliable and low-cost products.
Liquidity and Capital Resources We have 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. We recorded a net loss of $11.3 million in the fiscal year ended December 31, 2022.
Liquidity and Capital Resources We have financed our liquidity requirements from a variety of sources, including 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. We recorded a net loss of $8.5 million in the fiscal year ended December 31, 2023.
During the course of our strategic review of our operations, we assessed the recoverability of the carrying value of our long-lived assets which resulted in impairment losses of $4.8 million and nil for the years ended December 31, 2022 and 2021, respectively.
During the course of our strategic review of our operations, we assessed the recoverability of the carrying value of our long-lived assets which resulted in impairment losses of $7.1 million and $4.8 million for the years ended December 31, 2023 and 2022, respectively.
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 the same date for a term until January 16, 2023. We repaid the loan early on January 5, 2023.
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.
We repaid the loan on November 10, 2022. On September 25, 2022, we entered into a new 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.
On November 10, 2022, we repaid the loan principal and the related loan interests early. 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.
Goodwill impairment was $1.6 million for the year ended December 31, 2022. The impairment loss of goodwill was primarily attributable to the impairment related to Hitrans reporting unit. Hitrans reporting unit carrying value exceeded the fair value as of December 31, 2022, due to underperformance of Hitrans reporting unit. Recovery of (provision for) doubtful accounts.
Goodwill impairment was $1.6 million for the year ended December 31, 2022. The impairment loss of goodwill was primarily attributable to the impairment related to Hitrans reporting unit. Hitrans reporting unit carrying value exceeded the fair value as of December 31, 2022, due to underperformance of Hitrans reporting unit. Provision for expected credit losses.
As of August 31, 2021, we 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 August 31, 2021, we had not received any notices from investors to exercise the Series B warrants, which, along with the Series A-2 warrants, had expired.
Under the facilities, as of December 31, 2022, we borrowed a total of RMB15.9 million (approximately $2.3 million) in the form of bills payable for various terms expiring from January to June 2023, which was secured by our cash totaling RMB15.9 million (approximately $2.3 million).
Under the facilities, as of December 31, 2022 and 2023, we borrowed a total of RMB15.9 million (approximately $2.3 million) and RMB45.4 million (approximately $6.4 million), respectively, in the form of bills payable for various terms expiring from January 2024 to May 2024, which was secured by our cash totaling RMB15.9 million (approximately $2.3 million) and RMB45.4 million (approximately $6.4 million), respectively.
(All amounts in thousands of U.S. dollars) Year Ended December 31, December 31, 2021 2022 Purchase of property, plant and equipment and construction in progress $ 19,212 $ 12,373 We estimate that our total capital expenditures in fiscal year 2023 will reach approximately $80 million.
(All amounts in thousands of U.S. dollars) Year Ended December 31, December 31, 2022 2023 Purchase of property, plant and equipment and construction in progress $ 12,373 $ 31,141 We estimate that our total capital expenditures in fiscal year 2024 will reach approximately $30.0 million.
We issued warrants in the financings we consummated in December 2020 and February 2021, respectively. 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 our share price decline.
Changes in fair value of warrants liability. We issued warrants in the financings we consummated in December 2020 and February 2021, respectively. 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.
In 2022, the primary uses of net cash for investing activities were purchases of property, plant and equipment, and construction in progress, totaling $12.4 million offset by $4.5 million cash receipt from disposal of equity interest of Hitrans. Net cash used in investing activities was $38.1 million in the fiscal year ended December 31, 2021.
In 2022, the primary uses of net cash for investing activities were purchases of property, plant and equipment, and construction in progress, totaling $12.4 million offset by $4.5 million cash receipt from disposal of equity interest of Hitrans. 52 Financing Activities Net cash provided by financing activities was $18.6 million in the fiscal year ended December 31, 2023.
On July 8, 2020, we entered into certain exchange agreement with the Lender, pursuant to which the Company and the Lender agreed to (i) partition a new promissory note in the original principal amount equal to $250,000 from the outstanding balance of certain promissory note that the Company issued to the Lender on December 30, 2019, which has an original principal amount of $1,670,000, and (ii) exchange the partitioned promissory note for the issuance of 453,161 shares of the Company’s common stock, par value $0.001 per share to the Lender.
On June 8, 2020, we entered into a fourth exchange agreement (the “Fourth Exchange Agreement”) with the Lender, pursuant to which the Company and the Lender agreed to (i) partition a new promissory note in the original principal amount equal to $100,000 from the outstanding balance of certain promissory note that the Company issued to the Lender on July 24, 2019, which has an original principal amount of $1,395,000, and (ii) exchange the partitioned promissory note for the issuance of 271,739 shares of the Company’s common stock, par value $0.001 per share to the Lender.
Lending from Financial Institutions On November 16, 2021, the Company obtained banking facilities from Shaoxing Branch of Bank of Communications Co., Ltd with a maximum amount of RMB120.1 million (approximately $19.0 million) with maturity dates ranging from November 18, 2021 to November 18, 2026. The facility was secured by the Company’s land use rights and buildings.
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.
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 ($10.4 million) with other terms remain the same.
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.
We borrowed RMB10 million (approximately $1.4 million) on January 6, 2023. 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.
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.
Under the facilities, as of December 31, 2021, we borrowed a total of RMB10 million (approximately $1.6 million) from Bank of Ningbo Co., Ltd in the form of bills payable, with maturity dates ranging from January to February 2022, which were secured by our cash totaling RMB10 million (approximately $1.6 million).
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).
On January 5, 2023, we renewed the one-year term facility from Agricultural Bank of China, for a maximum amount 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 remaining the same.
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.
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 for Hitrans and CBAK Power which was recognized as a “High and New Technology Enterprise” and enjoyed a preferential tax rate of 15% from 2021 to 2024.
Our subsidiaries in PRC are subject to an income tax rate of 25%, except for Hitrans and CBAK Power which each was recognized as a “High and New Technology Enterprise” and enjoyed a preferential tax rate of 15% from 2021 to 2024.
Provision for doubtful accounts was $0.8 million for the year ended December 31, 2022, as compared to a recovery of $0.8 million for 2021. We determine the allowance based on historical write-off experience, customer specific facts and economic conditions. Operating loss.
Provision for expected credit losses was $1.3 million for the year ended December 31, 2023, as compared to $0.8 million for 2022. We determine the allowance based on historical write-off experience, customer specific facts and economic conditions. Operating loss.
As a result of the above, our operating loss totaled $11.5 million for the year ended December 31, 2022, as compared to $11.7 million for 2021, a decrease of $0.2 million or 2%. Finance income, net.
As a result of the above, our operating loss totaled $7.3 million for the year ended December 31, 2023, as compared to $11.5 million for 2022, a decrease of $4.3 million or 37.0%. Finance income, net. Finance income, net was $0.5 million for both the years ended December 31, 2023 and 2022. Other income (expenses), net.
Investing Activities Net cash used in investing activities decreased to $7.9 million in the fiscal year ended December 31, 2022, from $38.1 million in 2021.
Net cash used in investing activities was $7.9 million in the fiscal year ended December 31, 2022.
The facility was guaranteed by the Company’s 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 the loan early on January 16, 2023.
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. The Company repaid RMB10 million (approximately $1.4 million) on January 16, 2023.
We borrowed RMB10 million (approximately $1.4 million) on January 17, 2023 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.
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.
The following table sets forth a summary of our cash flows for the periods indicated: (All amounts in thousands of U.S. dollars) Year Ended December 31, December 31, 2021 2022 Net cash (used in) provided by operating activities $ (4,270 ) $ 15, 115 Net cash used in investing activities (38,081 ) (7,928 ) Net cash provided by financing activities 48,272 5,611 Effect of exchange rate changes on cash and cash equivalents and restricted cash (238 ) (1,797 ) Net increase in cash and cash equivalents and restricted cash 5,683 11,001 Cash and cash equivalents and restricted cash at the beginning of the year 20,672 26,355 Cash and cash equivalents and restricted cash at the end of the year $ 26,355 $ 37,356 43 Operating Activities Net cash provided by operating activities was $15.1 million in the year ended December 31, 2022, as compared to net cash used in operating activities of $4.3 million in 2021.
The following table sets forth a summary of our cash flows for the periods indicated: (All amounts in thousands of U.S. dollars) Year Ended December 31, December 31, 2022 2023 Net cash provided by operating activities $ 15,115 $ 46,507 Net cash used in investing activities (7,928 ) (42,310 ) Net cash provided by financing activities 5,611 18,615 Effect of exchange rate changes on cash and cash equivalents and restricted cash (1,797 ) (1,345 ) Net increase in cash and cash equivalents and restricted cash 11,001 21,467 Cash and cash equivalents and restricted cash at the beginning of the year 26,355 37,356 Cash and cash equivalents and restricted cash at the end of the year $ 37,356 $ 58,823 Operating Activities Net cash provided by operating activities was $46.5 million in the year ended December 31, 2023.
On November 8, 2022, we obtained a one-year term facility from China CITIC Bank with a maximum amount of RMB10 million (approximately $1.4 million). On November 8, 2022, we borrowed RMB10 million (approximately $1.4 million) under the facility, bearing interest rate at 4.35% per annum, with the maturity date to August 9, 2023.
On November 8, 2022, we entered into a short-term loan agreement with China CITIC Bank Shaoxing 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 recognize 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. 45 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 recognize 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.
Net revenues were $248.7 million for the fiscal year ended December 31, 2022, as compared to $52.7 million for the fiscal year ended December 31, 2021, an increase of $196 million, or 372%. The following table sets forth the breakdown of our net revenues by end-product applications.
Net revenues were $204.4 million for the fiscal year ended December 31, 2023, as compared to $248.7 million for the fiscal year ended December 31, 2022, a decrease of $44.3 million, or 18%. The following table sets forth the breakdown of our net revenues by end-product applications.
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.
However, there can be no assurance that we will be successful in obtaining such 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 borrowed a series of acceptance bills from Jiangsu Gaochun Rural Commercial Bank totaling RMB6.7 million (approximately $0.9 million) for various terms ending through January to June 2023, which was secured by our cash totaling RMB6.7 million (approximately $0.9 million) We borrowed a series of acceptance bills from China Zheshang Bank Co.
We borrowed a series of acceptance bills from Bank of China Limited totaling RMB4.9 million (approximately $0.7 million) for various terms through January 2024, which was secured by our cash totaling RMB4.9 million (approximately $0.7 million).
Net revenues from sales of batteries for uninterruptable supplies was $83.6 million for the fiscal year ended December 31, 2022, as compared to $33.3 million for fiscal year ended December 31, 2021, an increase of $50.3 million, or 151%.
Net revenues from sales of batteries for residential energy supply & uninterruptable supplies was $124.5 million for the fiscal year ended December 31, 2023, as compared to $83.6 million for fiscal year ended December 31, 2022, an increase of $40.9 million, or 49%.
According to the amount of loan, 2,062,619, 2,151,017 and 4,714,557 shares were issued to Mr. Yunfei Li, Asia EVK and Mr. Pin Shen, respectively. Upon receipt of the shares, the creditors released the Company from any claims, demands and other obligations relating to the Sixth Debt.
According to the amount of loan, 2,062,619, 2,151,017 and 4,714,557 shares were issued to Mr. Yunfei Li, Asia EVK and Mr. Pin Shen, respectively.
Under the facility, we borrowed RMB10 million (approximately $1.4 million) on April 29, 2022, bearing interest at 3.95% per annum for a term until April 29, 2023. On June 22, 2022, we obtained another one-year term facility from China Zheshang Bank Co., Ltd.
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.
Trade balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Inventories Inventories are stated at the lower of cost or net realizable value.
This is assessed at each quarter based on the Company’s specific facts and circumstances. Outstanding accounts receivable balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. Inventories Inventories are stated at the lower of cost or net realizable value.
On December 9, 2022, we obtained a RMB5 million (approximately $0.7 million) letter of credit from China CITIC Bank for a period to October 30, 2024 for settlement of Hitrans purchase. We have not utilized the letter of credit as of December 31, 2022.
On December 9, 2022, we obtained a RMB5 million (approximately $0.7 million) letter of credit from China CITIC Bank for a period to October 30, 2023 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, 2023.
Dollar Fiscal Year Ended December 31, December 31, 2021 2022 Balance sheet items, except for equity accounts 6.3551 6.9091 Amounts included in the statement of income and comprehensive loss and statement of cash flows 6.4525 6.7264 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Not applicable. 47
Dollar Fiscal Year Ended December 31, December 31, 2022 2023 Balance sheet items, except for equity accounts 6.9091 7.0971 Amounts included in the statement of income and comprehensive loss and statement of cash flows 6.7264 7.0719
As of December 31, 2022, we had cash and cash equivalents and restricted cash of $37.4 million. Our total current assets were $125.7 million and our total current liabilities were $111.9 million, resulting in a net working capital surplus of $13.8 million.
As of December 31, 2023, we had cash and cash equivalents and restricted cash of $58.8 million. Our total current assets were $128.4 million and our total current liabilities were $160.5 million, resulting in a net working capital deficit of $32.1 million.
We borrowed a series of acceptance bills from China Merchants Bank Dalian Branch totaling RMB96.4 million (approximately $14.0 million) for various terms ending through January to June 2023, which was secured by our cash totaling RMB96.4 million (approximately $14.0 million). As of December 31, 2022, we had unutilized committed banking facilities of $6.8 million.
We borrowed a series of acceptance bills from Bank of Ningbo Shaoxing Shangyu Branch totaling RMB6.7 million (approximately $0.9 million) for various terms expiring through May 2024, which was secured by our cash totaling RMB6.7 million (approximately $0.9 million). As of December 31, 2023, we had unutilized committed banking facilities of $2.8 million.
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 facilities were guaranteed by our CEO, Mr. Yunfei Li and Mr. Yunfei Li’s wife Ms. Qinghui Yuan.
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.
On June 22, 2017, we issued the shares to the investors. The issuance of the shares to the investors was made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act. In 2019, according to the securities purchase agreement and agreed by the investors, we returned partial earnest money of $966,579 (approximately RMB6.7 million) to these investors.
On June 22, 2017, we issued the shares to the investors. The issuance of the shares to the investors was made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act.
On July 24, 2019, we entered into a securities purchase agreement with Atlas Sciences, LLC (the “Lender”), pursuant to which we issued a promissory note (the “Note I”) to the Lender.
Upon receipt of the shares, the creditors released the Company from any claims, demands and other obligations relating to the Sixth Debt. 49 On July 24, 2019, we entered into a securities purchase agreement with Atlas Sciences, LLC (the “Lender”), pursuant to which we issued a promissory note (the “Note I”) to the Lender.
Pursuant to the terms of the cancellation agreement, Tillicum Investment Company Limited agreed to cancel the Seventh Debt in exchange for 3,192,291 shares of common stock of the Company, at an exchange price of $3.5 per share. Upon receipt of the shares, the creditor released the Company from any claims, demands and other obligations relating to the Seventh Debt.
On November 11, 2020, we entered into a cancellation agreement with Tillicum Investment Company Limited. Pursuant to the terms of the cancellation agreement, Tillicum Investment Company Limited agreed to cancel the Seventh Debt in exchange for 3,192,291 shares of common stock of the Company, at an exchange price of $3.5 per share.
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.
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.
Other income (expenses), net. Other expenses were $7.3 million for the year ended December 31, 2022, as compared to other income of approximately $3.6 million for 2021. For the year ended December 31, 2022, we written off our long-lived assets for $7.4 million was recognized. Changes in fair value of warrants liability.
Other income was $3.0 million for the year ended December 31, 2023, as compared to other expenses of approximately $7.3 million for 2022. For the year ended December 31, 2023, we have generated services income and materials sales compared to written off our long-lived assets for $7.4 million for the year ended December 31, 2022.
Cost of revenues increased to $230.6 million for the fiscal year ended December 31, 2022, as compared to $47.6 million for 2021, an increase of $183.1 million, or 385%. The increase in cost of revenues was in line with the increase of net revenues.
Cost of revenues. Cost of revenues decreased to $172.7 million for the fiscal year ended December 31, 2023, as compared to $230.6 million for 2022, a decrease of $57.9 million, or 25.1%. The decrease in cost of revenues was in line with the decrease of net revenues. Gross profit.
Gross profit for the year ended December 31, 2022 was $18.1 million, or 7.3% of net revenues as compared to gross profit of $5.1 million, or 9.7% of net revenues, for the fiscal year ended December 31, 2021. Gross profit margin slightly decreased largely due to increased pricing of battery raw materials. Research and development expenses.
Gross profit for the year ended December 31, 2023 was $31.7 million, or 15.5% of net revenues as compared to gross profit of $18.1 million, or 7.3% of net revenues, for the fiscal year ended December 31, 2022.
As a percentage of revenues, sales and marketing expenses were 0.8% and 4.4% of revenues for the years ended December 31, 2022 and 2021, respectively. For the year ended December 31, 2022, salaries, sales commissions and social insurance expenses for sales and marketing employees increased by approximately $0.5 million.
Sales and marketing expenses increased to $4.9 million for the year ended December 31, 2023, as compared to $2.0 million for 2022, an increase of $2.9 million, or 144.2%. As a percentage of revenues, sales and marketing expenses were 2.4% and 0.8% of revenues for the years ended December 31, 2023 and 2022, respectively.
We repaid RMB45 million (approximately $6.5 million) in March 2023 and borrowed RMB60 million (approximately $8.7 million) under the same facility for a term until February 15, 2024 to march 17, 2024, bearing annual interest rate at 3.65%. 38 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 $13.2 million).
Under the facility, we have borrowed RMB142.8 million (approximately $20.1 million) as of December 31, 2023, bearing interest at 3.55% to 3.65% per annum expiring through February to May 2024. 45 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).
The net cash used in operating activities in 2021 was mainly attributable to our net profit (before loss on disposal of property, plant and equipment, impairment charge of non-marketable equity securities and excluding non-cash depreciation and amortization, write-down of inventories, share-based compensation and changes in fair value of warrants liability) of $4.6 million offset by a decrease of uncertain tax position of 7.5 million.
The net cash provided by operating activities in 2023 was mainly attributable to our net income of $17.1 million (before loss on disposal of property, plant and equipment, impairment charge of long-lived assets, impairment loss of equity investee and excluding non-cash depreciation and amortization, write-down of inventories, share-based compensation and changes in fair value of warrants liability), increase of trade and bills payable by $16.8 million, a decrease of inventories of $11.2 million, a decrease of trade receivable from Shenzhen BAK Battery Co., Ltd.
General and administrative expenses slightly decreased to $9.7 million for the year ended December 31, 2022, as compared to $10.0 million for 2021, a decrease of $0.3 million, or 3%.
General and administrative expenses increased to $13.8 million for the year ended December 31, 2023, as compared to $9.7 million for 2022, an increase of $4.1 million, or 41.6%.
Ltd Shangyu Branch totaling RMB72.4 million (approximately $10.5 million) for various terms ending through January to June 2023, which were secured by our cash totaling RMB53.4 million (approximately $7.7 million) and our bills receivable totaling RMB22.2 million (approximately $3.2 million).
Ltd Shangyu Branch totaling RMB109.9 million (approximately $15.5 million) for various terms expiring through January to June 2024, which was secured by our cash totaling RMB106.3 million (approximately $15.0 million) (Note 3) and the Company’s bills receivable totaling RMB2 million (approximately $0.3 million).
The facility was guaranteed by 100% equity in CBAK Power held by BAK Asia and the Company’s CEO, Mr. Yunfei Li. The Company borrowed RMB10 million (approximately $1.6 million) on the same date. On May 17, 2022, we repaid the loan principal and related loan interests.
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.
As a result, we were able to secure more orders and increase our sales volume. 36 Net revenues from sales of batteries for light electric vehicles was approximately $6.4 million for the fiscal year ended December 31, 2022, as compared $0.7 million for 2021, representing an increase of $5.7 million, or 775%.
Consequently, we have scaled back our marketing efforts in this sector and plan to reassess our strategy once the price level recovers. 43 Net revenues from sales of batteries for light electric vehicles was approximately $5.6 million for the fiscal year ended December 31, 2023, as compared $6.4 million for 2022, representing a decrease of $0.8 million, or 13%.
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. 39 We borrowed a series of acceptance bills from Agricultural Bank of China totaling RMB28.4 million (approximately $4.1 million) for various terms through January to March 2023, which were secured by our cash totaling RMB28.4 million (approximately $4.1 million).
We borrowed a series of acceptance bills from China CITIC Bank totaling RMB0.4 million (approximately $0.1 million) for various terms expiring through March 2024, which was secured by our cash totaling RMB0.6 million (approximately $0.1 million).
Net revenues from sales of materials for use in manufacturing of lithium battery cell were $154.0 million for the fiscal year ended December 31, 2022, as compared to $17.9 million for 2021.
Net revenues from sales of materials for use in manufacturing of lithium battery cells were $71.4 million for the fiscal year ended December 31, 2023, as compared to $154.0 million for 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.
We repaid RMB5.0 million (approximately $0.7 million) and RMB0.2 million (approximately $0.1 million) on November 16, 2022 and December 27, 2022, respectively. On December 27, 2022, we entered into another facility with China CITIC Bank for a maximum amount of RMB0.2 million (approximately $0.1 million), the interest rate is 4.2%, and the maturity date is December 27, 2023.
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 plan to renew our bank 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 such financing.
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 our bank 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.
As we continue to invest in R&D and improve our product offerings, we expect to remain a leader in the energy storage industry and see continued growth in sales.
As we continue to invest in R&D and improve our product offerings, we expect to remain a leader in the energy storage industry and see continued growth in sales. Net revenues from trading of raw materials used in lithium batteries was nil for the fiscal year ended December 31, 2023, as compared with $2,172 in the same period in 2022.
Finance income, net was $0.5 million for the year ended December 31, 2022, as compared to finance income, net of $0.8 million for the year ended December 31, 2021, as a result of a higher loan balance in 2022. The interest expenses for the year ended December 31, 2022 and 2021 was $0.6 million and $0.3 million, respectively.
The increase in the income tax expenses was primarily due to the “full valuation allowance” of the deferred tax assets. Net loss. As a result of the foregoing, we had a net loss of $8.5 million and $11.3 million for the year ended December 31, 2023 and 2022, respectively.
As of December 31, 2022, 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 $ 14,300 $ 8,540 Industrial and Commercial Bank of China Limited 1,737 1,447 China CITIC Bank 724 - 16,761 9,987 Short-term credit facilities: China CITIC Bank 724 724 Jiangsu Gaochun Rural Commercial Bank 2,750 2,750 Agricultural Bank of China 1,447 1,447 4,921 4,921 Other lines of credit: Shaoxing Branch of Bank of Communications Co., Ltd 3,167 3,167 Agricultural Bank of China 4,114 4,114 Jiangsu Gaochun Rural Commercial Bank 969 969 Bank of Ningbo Nanjing Gaochun Branch 2,296 2,296 China Zheshang Bank Co., Ltd 10,475 10,475 China Merchants Bank Co., Ltd, Dalian Development Zone Branch 13,954 13,954 34,975 34,975 Total $ 56,657 $ 49,883 44 Capital Expenditures We incurred capital expenditures of $19.2 million and $12.4 million in the fiscal years ended December 31, 2022 and 2021, respectively.
As of December 31, 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 Amount available borrowed Long-term credit facilities: Shaoxing Branch of Bank of Communications Co., Ltd $ 22,547 $ 20,076 Industrial and Commercial Bank of China Limited 1,691 1,409 Postal Savings Bank of China Nanjing Gaochun Branch 1,409 1,409 25,647 22,894 Short-term credit facilities: China CITIC Bank 705 676 Jiangsu Gaochun Rural Commercial Bank 2,677 2,677 Agricultural Bank of China 1,409 1,409 Bank of Nanjing Gaochun Branch 1,409 1,409 Bank of China Gaochun Branch 1,409 1,409 Bank of China Dalian Jinpu New Area Branch 2,114 2,114 9,723 9,694 Other lines of credit: Agricultural Bank of China 653 653 Jiangsu Gaochun Rural Commercial Bank 4,311 4,311 Bank of Ningbo Nanjing Gaochun Branch 6,404 6,404 Bank of Ningbo Shaoxing Shangyu Branch 941 941 China Zheshang Bank Co., Ltd 15,490 15,490 China Merchants Bank Co., Ltd, Dalian Development Zone Branch 1,315 1,315 Bank of China, Dalian Jinzhou Branch 685 685 Bank of Jilin Co., Ltd 875 875 China Citibank Shaoxing Shangyu Branch 51 51 Zhejiang Commercial Bank Shenyang Branch 24,517 24,517 55,242 55,242 Total $ 90,612 $ 87,830 Capital Expenditures We incurred capital expenditures of $30.7 million and $12.4 million in the fiscal years ended December 31, 2023 and 2022, respectively.
On January 14, 2023, we renewed the one-year term facility from Jiangsu Gaochun Rural Commercial Bank, for a maximum amount of RMB10 million (approximately $1.4 million) bearing interest at 129% of benchmark rate of the People’s Bank of China (“PBOC”) for short-term loans, which is 4.7% per annum.
We repaid the loan on September 24, 2023. 46 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 27, 2023 to August 31, 2024.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

110 edited+54 added−20 removed229 unchanged
Biggest changeThe regulations also established additional procedures and requirements that are expected to make merger and acquisition activities in China by foreign investors more time consuming and complex, including requirements in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise, or that the approval from the MOFCOM be obtained in circumstances where overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. 16 Moreover, according to the Anti-Monopoly Law of the People’s Republic of China promulgated on August 30, 2007 and the Provisions on Thresholds for Reporting of Concentrations of Undertakings (the “Prior Reporting Rules”) issued by the State Council in August 2008 and amended in September 2018, the concentration of business undertakings by way of mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the anti-monopoly enforcement agency of the State Council when the applicable threshold is crossed and such concentration shall not be implemented without the clearance of prior reporting.
Biggest changeMoreover, according to the Anti-Monopoly Law of the People’s Republic of China promulgated on August 30, 2007 and the Provisions on Thresholds for Reporting of Concentrations of Undertakings (the “Prior Reporting Rules”) issued by the State Council in August 2008 and amended in September 2018, the concentration of business undertakings by way of mergers, acquisitions or contractual arrangements that allow one market player to take control of or to exert decisive impact on another market player must also be notified in advance to the anti-monopoly enforcement agency of the State Council when the applicable threshold is crossed and such concentration shall not be implemented without the clearance of prior reporting.
If the intended overseas offering and listing necessitates a national security review, relevant security review procedures shall be completed according to the law before the application for such offering and listing is sub-mitted to any overseas parties such as securities regulatory agencies and trading venues; 14 The Trial Measures came into effect on March 31, 2023.
If the intended overseas offering and listing necessitates a national security review, relevant security review procedures shall be completed according to the law before the application for such offering and listing is sub-mitted to any overseas parties such as securities regulatory agencies and trading venues; The Trial Measures came into effect on March 31, 2023.
In addition, the U.S. government may seek to hold our subsidiaries liable for successor liability FCPA violations committed by companies in which we invest or that we acquire. 20 RISKS RELATED TO OUR BUSINESS Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.
In addition, the U.S. government may seek to hold our subsidiaries liable for successor liability FCPA violations committed by companies in which we invest or that we acquire. RISKS RELATED TO OUR BUSINESS Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.
Increased competition may result in declines in average selling prices, causing a decrease in gross profit margins. We have faced and will continue to face competition from manufacturers of traditional rechargeable batteries, such as lead-acid batteries other manufacturers of lithium-ion batteries, as well as from companies engaged in the development of batteries incorporating new technologies.
Increased competition may result in declines in average selling prices, causing a decrease in gross profit margins. We have faced and will continue to face competition from manufacturers of traditional rechargeable batteries, such as lead-acid batteries, other manufacturers of lithium-ion batteries and companies engaged in the development of batteries incorporating new technologies.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. The PRC government exerts substantial influence over the manner in which we conduct our business activities.
Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects. 16 The PRC government exerts substantial influence over the manner in which we conduct our business activities.
If we were to suffer any losses or damages to any of the facilities before the purchase of insurance policies that provide adequate coverage, our business, financial condition and results of operations may be materially and adversely affected. In addition, Hitrans maintains property insurance coverage against certain property and inventory damages and losses.
If we were to suffer any losses or damages to any of the facilities before the purchase of insurance policies that provide adequate coverage, our business, financial condition and results of operations may be materially and adversely affected. In addition, our subsidiary, Hitrans, maintains property insurance coverage against certain property and inventory damages and losses.
ITEM 1A. RISK FACTORS. RISKS RELATED TO DOING BUSINESS IN CHINA The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors of the benefits of such inspections.
ITEM 1A. RISK FACTORS. RISKS RELATED TO DOING BUSINESS IN CHINA The PCAOB had historically been unable to inspect our former auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our former auditor in the past has deprived our investors of the benefits of such inspections.
Any investment in the common stock of CBAK Energy Technology, Inc. could be greatly reduced or even rendered worthless due to such allegations. 28 If we fail to comply with the continued listing requirements of NASDAQ, we would face possible delisting, which would result in a limited public market for shares of CBAK Energy Technology, Inc. and make obtaining future debt or equity financing more difficult for us.
Any investment in the common stock of CBAK Energy Technology, Inc. could be greatly reduced or even rendered worthless due to such allegations. 35 If we fail to comply with the continued listing requirements of NASDAQ, we would face possible delisting, which would result in a limited public market for shares of CBAK Energy Technology, Inc. and make obtaining future debt or equity financing more difficult for us.
In anticipation of an expected increase in the demand for high-power electric devices such as electric vehicles, light electric vehicles, electric tools, and energy storage including UPS application in the next few years, we are building new manufacturing facilities in Nanjing and have invested in the R&D capability of our newly acquired battery materials business.
In anticipation of an expected increase in the demand for high-power electric devices such as electric vehicles, light electric vehicles, electric tools, and energy storage including residential energy supply and UPS application in the next few years, we are building new manufacturing facilities in Nanjing and have invested in the R&D capability of our newly acquired battery materials business.
These risks may have a material adverse effect on our business, financial condition and results of operations. 18 Under the Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders.
These risks may have a material adverse effect on our business, financial condition and results of operations. 22 Under the Enterprise Income Tax Law, we may be classified as a “resident enterprise” of China. Such classification will likely result in unfavorable tax consequences to us and our non-PRC shareholders.
As we target the battery markets for light electric vehicles, electric vehicles, electric tools, energy storage including but not limited to UPS application, and other high-power electric devices, our future success in part depends on whether end-application manufacturers are willing to use batteries that incorporate our products.
As we target the battery markets for light electric vehicles, electric vehicles, electric tools, energy storage including but not limited to residential energy supply & UPS application, and other high-power electric devices, our future success in part depends on whether end-application manufacturers are willing to use batteries that incorporate our products.
Although we are not dependent on single suppliers for supply of raw materials, we mostly purchase raw materials through individual purchase orders or short-term contracts and not pursuant to long-term contracts. As such, our third-party suppliers may not be able to satisfy our requirements during a period of sustained or growing demand.
Although we are not dependent on single suppliers for the supply of any raw materials, we mostly purchase raw materials through individual purchase orders or short-term contracts and not pursuant to long-term contracts. As such, our third-party suppliers may not be able to satisfy our requirements during a period of sustained or growing demand.
However, the implementation of these measures may not fully address the material weakness in our internal control over financial reporting. Our failure to address any control deficiency could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis.
However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting. Our failure to address any control deficiency could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis.
In response to the SEC’s July 30, 2021 statement, the CSRC announced on August 1, 2021, that “it is our belief that Chinese and U.S. regulators shall continue to enhance communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of China-based companies listed in the U.S. so as to form stable policy expectations and create benign rules framework for the market.” The CSRC pledged to continue to collaborate “closely with different stakeholders including investors, companies, and relevant authorities to further promote transparency and certainty of policies and implementing measures,” and emphasized that it “has always been open to companies’ choices to list their securities on international or domestic markets in compliance with relevant laws and regulations.” If any new legislation, executive orders, laws and/or regulations are implemented, if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tension or if the Chinese government exerts more oversight and control over securities offerings that are conducted in the United States, such changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the value of our securities.
In response to the SEC’s July 30, 2021 statement, the CSRC announced on August 1, 2021, that “it is our belief that Chinese and U.S. regulators shall continue to enhance communication with the principle of mutual respect and cooperation, and properly address the issues related to the supervision of China-based companies listed in the U.S. so as to form stable policy expectations and create benign rules framework for the market.” The CSRC pledged to continue to collaborate “closely with different stakeholders including investors, companies, and relevant authorities to further promote transparency and certainty of policies and implementing measures,” and emphasized that it “has always been open to companies’ choices to list their securities on international or domestic markets in compliance with relevant laws and regulations.” If any new legislation, executive orders, laws and/or regulations are implemented, if the U.S. or Chinese governments take retaliatory actions due to the recent U.S.-China tension or if the Chinese government exerts more oversight and control over securities offerings that are conducted in the United States, such changes could have an adverse effect on our business, financial condition and results of operations, our ability to raise capital and the value of our securities. 19 There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations.
Currently, we do not have a business relationship with any of the banking institutions mentioned above, and our cash, cash equivalents and short term investments that are mostly concentrated in China have been unaffected by the turmoil in the financial industry in the US and Europe; however, we cannot guarantee that the banking institution with which we do business will not face similar circumstances in the future, or that the third parties with whom we do business will not be negatively affected by such circumstances. 31 ITEM 1B.
Currently, we do not have a business relationship with any of the banking institutions mentioned above, and our cash, cash equivalents and short term investments that are mostly concentrated in China have been unaffected by the turmoil in the financial industry in the US and Europe; however, we cannot guarantee that the banking institution with which we do business will not face similar circumstances in the future, or that the third parties with whom we do business will not be negatively affected by such circumstances.
The inability of the PCAOB to conduct inspections of auditors in Hong Kong in the past has made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors that are subject to the PCAOB inspections.
The inability of the PCAOB to conduct inspections of auditors in Hong Kong in the past has made it more difficult to evaluate the effectiveness of our independent registered public accounting firms’ audit procedures or quality control procedures as compared to auditors that are subject to the PCAOB inspections.
A significant increase in the cost of insurance coverage could adversely affect our business, financial condition and results of operations. 25 We depend on third parties to supply key raw materials and components to us.
A significant increase in the cost of insurance coverage could adversely affect our business, financial condition and results of operations. 30 We depend on third parties to supply key raw materials and components to us.
Our sales contracts for battery cells typically provide for a non-binding, three-month forecast on the quantity of products that our customers may purchase from us. Our sales contracts for battery materials typically provide for a non-binding, two-month forecast on the quantity of products that our customers may purchase from us.
Our sales contracts for battery materials typically provide for a non-binding, two-month forecast on the quantity of products that our customers may purchase from us.
As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our shares, may be materially and adversely affected. 27 RISKS RELATED TO COMMON STOCK Numerous factors, many of which are beyond our control, may cause the market price of common stock to fluctuate significantly.
As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our shares, may be adversely affected. 34 RISKS RELATED TO COMMON STOCK Numerous factors, many of which are beyond our control, may cause the market price of common stock to fluctuate significantly.
As discussed in Note 1 to the consolidated financial statements included herein, we had 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 December 31, 2022. These conditions raise substantial doubt about our ability to continue as a going concern.
As discussed in Note 1 to the consolidated financial statements included herein, we had a working capital deficiency, 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 December 31, 2023. These conditions raise substantial doubt about our ability to continue as a going concern.
If damages or losses exceed the insurance coverage, it may not be able to return to operation for an extended period of time, potentially even threatening its viability. In addition, insurance coverage is expensive, may be difficult to obtain and may not be available in the future on acceptable terms or at all.
If damages or losses exceed the insurance coverage, we may not be able to return to operation for an extended period of time, potentially even threatening our viability. In addition, insurance coverage is expensive, may be difficult to obtain and may not be available in the future on acceptable terms or at all.
For the years ended December 31, 2022 and 2021, we derived 20% and 17%, respectively, of our sales from outside the PRC mainland. We deem overseas market as an important revenue source for us, and have been actively pursuing opportunities to expand our customer base overseas.
For the years ended December 31, 2023 and 2022, we derived 42% and 20%, respectively, of our sales from outside the PRC mainland. We deem overseas market as an important revenue source for us, and have been actively pursuing opportunities to expand our customer base overseas.
Its oversight and discretion over our business could result in a material adverse change in our operations and the value of our common stock. Changes in laws, regulations and policies in China and uncertainties with respect to the PRC legal system could materially and adversely affect us.
Its oversight and discretion over our business could result in a material adverse change in our operations and the value of our common stock. Changes in laws, regulations and policies in China and uncertainties with respect to the PRC legal system could materially and adversely affect us. In addition, rules and regulations in China can change quickly.
Maintaining our R&D activities and manufacturing operations require significant capital expenditures, and our inability or failure to maintain our operations could have a material adverse impact on our market share and ability to generate revenue. We incurred capital expenditures of approximately $19.2 million and $12.4 million for the years ended December 31, 2021 and 2022, respectively.
Maintaining our R&D activities and manufacturing operations require significant capital expenditures, and our inability or failure to maintain our operations could have a material adverse impact on our market share and ability to generate revenue. We incurred capital expenditures of approximately $12.4 million and $31.1 million for the years ended December 31, 2022 and 2023, respectively.
On February 20, 2020, we received notice from the Listing Qualifications Department of The NASDAQ Stock Market (“Nasdaq”) indicating that, for the last 30 consecutive business days, the bid price for the common stock had closed below the minimum $1.00 per share and as a result, CBAK Energy Technology, Inc. was no longer in compliance with the NASDAQ Listing Rule 5550(a)(2).
On September 27, 2023, we received notice from the Listing Qualifications Department of The NASDAQ Stock Market (“Nasdaq”) indicating that, for the last 30 consecutive business days, the bid price for the common stock had closed below the minimum $1.00 per share and as a result, CBAK Energy Technology, Inc. was no longer in compliance with the NASDAQ Listing Rule 5550(a)(2).
However, such insurance may not adequately compensate it for any such losses and will not address a loss of customers as a result of property damages and consequent disruptions to operations or may have large deductibles insufficient to support its continuing operations.
However, such insurance may not adequately compensate us for any such losses and will not address a loss of customers as a result of property damages and consequent disruptions to operations or may have large deductibles insufficient to support our continuing operations.
Our manufacturing operations, among others, cannot all be conducted in a remote working structure and often require on-site access to materials and equipment. Our international customers account for approximately 20% of our sales in 2022.
Our manufacturing operations, among others, cannot all be conducted in a remote working structure and often require on-site access to materials and equipment. Our international customers account for approximately 42% of our sales in 2023.
However, we have been looking for opportunities to re-enter the electric vehicle battery market by continuing to develop batteries suitable for electric vehicles and actively cooperating with previous electric vehicle customers in battery pack after-sales service and technical support. As a result of our efforts, we generated approximately $4.7 million revenues from electric vehicle customers in 2022.
However, we have been looking for opportunities to re-enter the electric vehicle battery market by continuing to develop batteries suitable for electric vehicles and actively cooperating with previous electric vehicle customers in battery pack after-sales service and technical support. As a result of our efforts, we generated approximately $2.8 million revenues from electric vehicle customers in 2023.
Yunfei Li, our president and chief executive officer and chairman of our board, and our other executive officers and directors beneficially own an aggregate of 12.82% of outstanding common stock of CBAK Energy Technology, Inc. as of December 31, 2022.
Yunfei Li, our president and chief executive officer and chairman of our board, and our other executive officers and directors beneficially own an aggregate of 12.89% of outstanding common stock of CBAK Energy Technology, Inc. as of December 31, 2023.
GAAP, commensurate with our financial reporting requirements. A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We have taken measures and plan to continue to take measures to remedy this material weakness. We have regularly offered our financial personnel trainings on internal control and risk management, and we have regularly provided trainings to our financial personnel on U.S. GAAP accounting guidelines.
We have taken measures and plan to continue to take measures to remedy the material weaknesses. We have regularly offered our financial personnel trainings on internal control and risk management, and we have regularly provided trainings to our financial personnel on U.S. GAAP accounting guidelines.
We consummated the acquisition of 81.56% of registered equity interests (representing 75.57% of paid-up capital) in Hitrans in November 2021 (such ownership percentage reduced to 67.33% of registered equity interests and 69.12% of paid-up capital as of December 31, 2022, as a result of Hitrans’s subsequent equity financings and our transfer of some of our equity interests in Hitrans).
We consummated the acquisition of 81.56% of registered equity interests (representing 75.57% of paid-up capital) in Hitrans in November 2021 (such ownership percentage reduced to 67.33% of registered equity interests (representing 72.99% of paid-up capital) as of December 31, 2023, as a result of Hitrans’s subsequent equity financings and our transfer of some of our equity interests in Hitrans).
For example, we recently experienced significant increases in the costs of nickel and cobalt, as a result of the current Ukrainian-Russian conflict, as well as in the cost of lithium carbonate due to large market demand and supply imbalance.
For example, we experienced significant increases in the costs of nickel and cobalt in 2022, as a result of the Ukrainian-Russian conflict, as well as in the cost of lithium carbonate due to large market demand and supply imbalance from 2021 to 2022.
We regained compliance with the minimum bid price rule on October 2, 2020. We cannot assure you that CBAK Energy Technology, Inc. will continue to comply with the requirements for continued listing on the NASDAQ Capital Market in the future.
We regained compliance with the minimum bid price rule on January 8, 2024. We cannot assure you that CBAK Energy Technology, Inc. will continue to comply with the requirements for continued listing on the NASDAQ Capital Market in the future.
The PRC legal system is a civil law system based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general.
Unlike the common law system, prior court decisions may be cited for reference but have limited precedential value. In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economic matters in general.
To implement Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company’s internal control over financial reporting in their annual reports on Form 10-K.
To implement Section 404 of the Sarbanes-Oxley Act of 2002, or SOX 404, the SEC adopted rules requiring public companies to include a report of management on the company’s internal control over financial reporting in their annual reports on Form 10-K. A report of our management is included under Item 9A of this annual report.
We are aware of certain companies, including Sumitomo Metal Mining Co., Ltd., Umicore N.V., Beijing Easpring Material Technology Co., Ltd. and Ningbo Ronbay Lithium Battery Material Co., Ltd. using cell chemistry technology similar to our technology and these or other companies have introduced or could introduce products that compete directly with our products and could in the future outperform our products in one or more performance attributes, could be offered to our customers as a cheaper alternative to our products or may result in increased pricing pressure on our products.
We are aware of certain companies, including Sumitomo Metal Mining Co., Ltd., Umicore N.V., Beijing Easpring Material Technology Co., Ltd. and Ningbo Ronbay Lithium Battery Material Co., Ltd. using cell chemistry technology similar to our technology and these or other companies have introduced or could introduce products that compete directly with our products and could in the future outperform our products in one or more performance attributes, could be offered to our customers as a cheaper alternative to our products or may result in increased pricing pressure on our products. 27 We are dependent on a limited number of customers for a significant portion of our revenues and this dependence is likely to continue.
Because of the highly specialized, technical nature of our business, we must attract, train and retain a sizable workforce comprising highly skilled employees and other key personnel.
The success of our business depends on our ability to attract, train and retain highly skilled employees and key personnel. Because of the highly specialized, technical nature of our business, we must attract, train and retain a sizable workforce comprising highly skilled employees and other key personnel.
Some other countries, including the U.S., also introduced various restrictions in response to the COVID-19 pandemic. The ongoing COVID-19 pandemic as well as other possible health epidemics and outbreaks could have a material adverse impact on our or our customers’ business operations including reduction or suspension of operations in China, the U.S. or certain parts of the world.
The ongoing COVID-19 pandemic as well as other possible health epidemics and outbreaks could have a material adverse impact on our or our customers’ business operations including reduction or suspension of operations in China, the U.S. or certain parts of the world.
We have put into operation a production line of model 32140 large-sized cylindrical “tabless” batteries with a production capacity of 0.7 GWh per year in 2021. Model 32140 batteries can be used in light electric vehicles, electric vehicles, electric tools and energy storage.
We have put into operation two production lines of model 32140 large-sized cylindrical “tabless” batteries with a production capacity of 2 GWh per year. Model 32140 batteries can be used in light electric vehicles, electric vehicles, electric tools and energy storage.
The market for cathode materials and precursors has been evolving rapidly. Rapid and ongoing changes in technology and product standards could render our cathode materials and precursor products less competitive, or even obsolete, particularly if we fail to continue to improve the performance of our cathode materials and precursor products.
Rapid and ongoing changes in technology and product standards could render our cathode materials and precursor products less competitive, or even obsolete, particularly if we fail to continue to improve the performance of our cathode materials and precursor products.
The marketing, international distribution and sale of our products expose us to a number of risks, including: ● fluctuations in currency exchange rates; ● difficulty in engaging and retaining distributors that are knowledgeable about, and can function effectively in, overseas markets; ● increased costs associated with maintaining marketing efforts in various countries; ● difficulty and cost relating to compliance with the different commercial and legal requirements of the overseas markets in which we offer our products; ● inability to obtain, maintain or enforce intellectual property rights; and ● trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make us less competitive in some countries.
The marketing, international distribution and sale of our products expose us to a number of risks, including: ● fluctuations in currency exchange rates; ● difficulty in engaging and retaining distributors that are knowledgeable about, and can function effectively in, overseas markets; ● increased costs associated with maintaining marketing efforts in various countries; ● difficulty and cost relating to compliance with the different commercial and legal requirements of the overseas markets in which we offer our products; ● inability to obtain, maintain or enforce intellectual property rights; and ● trade barriers such as export requirements, tariffs, taxes and other restrictions and expenses, which could increase the prices of our products and make us less competitive in some countries. 33 Our business depends substantially on the continuing efforts of our senior executives and other key personnel, and our business may be severely disrupted if we lose their services.
The auditor is located in Hong Kong, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. As a result, we and investors in our common stock were deprived of the benefits of such PCAOB inspections.
Both our current and former auditors are located in Hong Kong, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. As a result, we and investors in our common stock were deprived of the benefits of such PCAOB inspections until 2022.
Our financial condition and results of operations could be materially and adversely affected by government control over capital investments or changes in tax regulations that are applicable to us. 13 The Chinese government recently has published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will not in the future release regulations or policies regarding our industry that could require us or our PRC subsidiaries to seek permission from Chinese authorities to continue to operate our business in China, which may adversely affect our business, financial condition and results of operations.
The Chinese government in recent years has published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will not in the future release regulations or policies regarding our industry that could require us or our PRC subsidiaries to seek permission from Chinese authorities to continue to operate our business in China, which may adversely affect our business, financial condition and results of operations.
If we fail to remediate the material weaknesses or maintain an effective system of internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our shares may be adversely affected.
If we fail to remediate the material weaknesses, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our shares may be adversely affected.
If we fail to sell our products to one or more of these top customers in any particular period, or if a large customer purchases fewer of our products, defers orders or fails to place additional orders with us, or if we fail to develop additional major customers, our revenue could decline, and our results of operations could be adversely affected. 23 In addition to our own production, we also rely on a few battery suppliers to fulfill our customers’ orders.
If we fail to sell our products to one or more of these top customers in any particular period, or if a large customer purchases fewer of our products, defers orders or fails to place additional orders with us, or if we fail to develop additional major customers, our revenue could decline, and our results of operations could be adversely affected.
In 2022, our sales of cathode materials and precursors reached $154.0 million. However, we cannot guarantee that the market demand for the cathode materials and precursors will maintain the current growth rate. Even if a manufacturer decides to use batteries that incorporate our products, the manufacturer may not be able to market and sell its products successfully.
In 2023, our sales of cathode materials and precursors reached $71.4 million. However, we cannot guarantee that the market demand for the cathode materials and precursors will not decline. Even if a manufacturer decides to use batteries that incorporate our products, the manufacturer may not be able to market and sell its products successfully.
Producing additional products to make up for any product shortages within a short time frame may be difficult, making us unable to fill out the purchase orders. In either case, our results of operation would fluctuate from period to period. We may not be able to substantially increase our manufacturing output in order to maintain our cost competitiveness.
Producing additional products to make up for any product shortages within a short time frame may be difficult, making us unable to fill out the purchase orders. In either case, our results of operation would fluctuate from period to period.
There is uncertainty as to the application of Bulletin 37 or previous rules under Bulletin 7. We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries or investments.
We face uncertainties as to the reporting and other implications of certain past and future transactions where PRC taxable assets are involved, such as offshore restructuring, sale of the shares in our offshore subsidiaries or investments.
Failure to comply with PRC environmental laws and regulations may materially and adversely affect our business, financial condition and results of operations. 26 We face risks associated with the marketing, distribution and sale of our products internationally, and if we are unable to effectively manage these risks, they could impair our ability to expand our business abroad.
Any of these factors could adversely affect our business, financial condition, and results of operations. We face risks associated with the marketing, distribution and sale of our products internationally, and if we are unable to effectively manage these risks, they could impair our ability to expand our business abroad.
Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.
Any intellectual property litigation could have a material adverse effect on our business, results of operation and financial condition. 37 Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.
We cannot provide assurance that market acceptance of our new products will occur due to the highly competitive nature of the business. The Company competes in the battery industry where there are frequent introductions of new products and line extensions and such product introductions often require significant investment and support.
We cannot provide assurance that market acceptance of our new products will occur due to the highly competitive nature of the business, or our future business ventures will not fail. The Company has operated and competed in industries where there are frequent introductions of new products and line extensions and such product introductions often require significant investment and support.
Following issuance of the Draft Overseas Listing Regulations, on February 17, 2023, the CSRC issued the Notice on Filing Arrangements for Overseas Securities Offering and Listing by Domestic Companies (the “CSRC Filing Notice”), stating that the CSRC has published the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines (the “Listing Guidelines”), collectively the Trial Measures and Listing Guidelines.
On December 24, 2021, the CSRC issued the Provisions of the State Council on the Administration of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments) and the Administrative Measures for the Filing of Overseas Securities Offering and Listing by Domestic Companies (Draft for Comments), collectively the Draft Overseas Listing Regulations, for public comment until January 23, 2022. 17 Following issuance of the Draft Overseas Listing Regulations, on February 17, 2023, the CSRC issued the Notice on Filing Arrangements for Overseas Securities Offering and Listing by Domestic Companies (the “CSRC Filing Notice”), stating that the CSRC has published the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies (the “Trial Measures”) and five supporting guidelines (the “Listing Guidelines”), collectively the Trial Measures and Listing Guidelines.
Therefore, our failure to effectively keep up with rapid technological changes and evolving industry standards by introducing new and enhanced products may cause us to lose our market share and to suffer a decrease in our revenue. 22 Our efforts to enter into the light electric vehicle business could fail.
Therefore, our failure to effectively keep up with rapid technological changes and evolving industry standards by introducing new and enhanced products may cause us to lose our market share and to suffer a decrease in our revenue.
Our management has 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, and there was insufficient accounting personnel with an appropriate level of technical accounting knowledge and experience in the application of accounting principles generally accepted in the United States of America, or U.S.
Our management has identified the following material weaknesses in our internal control over financial reporting: (i) we did not have appropriate policies and procedures in place to evaluate the proper accounting and disclosures of key documents and agreements, and (ii) 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.
As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon these persons.
All or a substantial portion of the assets of these persons are located outside the United States and in the PRC. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon these persons.
If we cannot achieve the expected level of sales, we will not be able to make sufficient profits to offset the expenditures we have incurred to expand our production capacity or develop new technologies, nor will we be able to grow our business.
If we cannot achieve the expected level of sales, we will not be able to make sufficient profits to offset the expenditures we have incurred to expand our production capacity or develop new technologies, nor will we be able to grow our business. Accordingly, our business, financial condition, results of operations and future success would be materially and adversely affected.
Additionally, the Trial Measures stipulate that after an issuer has offered and listed securities in an overseas market, the issuer shall submit a report to the CSRC within three working days after the occurrence and public disclosure of (i) a change of control thereof, (ii) investigations of or sanctions imposed on the issuer by overseas securities regulators or relevant competent authorities, (iii) changes of listing status or transfers of listing segment, and (iv) a voluntary or mandatory delisting.
Additionally, the Trial Measures stipulate that after an issuer has offered and listed securities in an overseas market, the issuer shall submit a report to the CSRC within three working days after the occurrence and public disclosure of (i) a change of control thereof, (ii) investigations of or sanctions imposed on the issuer by overseas securities regulators or relevant competent authorities, (iii) changes of listing status or transfers of listing segment, and (iv) a voluntary or mandatory delisting. 18 The CSRC Filing Notice states that, beginning from March 31, 2023, PRC domestic enterprises which have already issued and listed securities overseas and fall within the scope of filing under the Trial Measures shall be considered “existing enterprises” (“Existing Listed Enterprises”).
Our response to the ongoing COVID-19 pandemic may prove to be inadequate and we may be unable to continue our operations in the manner we had prior to the outbreak, and may endure interruptions and delays in our product development and shipments, all of which could have an adverse effect on our business, operating results, and financial condition. 21 The acquisition of a controlling interest in Hitrans may fail to result in anticipated benefits but has involved significant investment and commitment of financial and other resources.
Our response to the ongoing COVID-19 pandemic may prove to be inadequate and we may be unable to continue our operations in the manner we had prior to the outbreak, and may endure interruptions and delays in our product development and shipments, all of which could have an adverse effect on our business, operating results, and financial condition.
If we fail to effectively manage our relationships with, or lose the services of these suppliers and we cannot substitute suitable alternative suppliers, our operations would be materially adversely affected.
In addition to our own production, we also rely on a few battery suppliers to fulfill our customers’ orders. If we fail to effectively manage our relationships with, or lose the services of these suppliers and we cannot substitute suitable alternative suppliers, our operations would be materially adversely affected.
Management attention may be diverted from regular business concerns by reorganizations. We have identified material weaknesses in our internal control over financial reporting.
Management attention may be diverted from regular business concerns by reorganizations. We and our independent public accounting firm identified material weaknesses in our internal control over financial reporting as of December 31, 2023.
Assessment of the potential impairment of property, plant and equipment and other identifiable intangible assets is an integral part of our normal ongoing review of operations. Testing for potential impairment of long-lived assets is dependent on numerous assumptions and reflects our best estimates at a particular point in time, which may vary from testing date to testing date.
Testing for potential impairment of long-lived assets is dependent on numerous assumptions and reflects our best estimates at a particular point in time, which may vary from testing date to testing date.
Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards.
Our current auditor, ARK Pro CPA & CO, as well as our former auditor, Centurion ZD CPA & Co, the independent registered public accounting firms that issue the audit reports included elsewhere in this annual report, as auditors of companies that are traded publicly in the United States and firms registered with the PCAOB, are currently subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess their compliance with the applicable professional standards.
In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies.
In addition, our foreign currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert RMB into foreign currencies. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.
As a result, we are not assured of an uninterrupted supply of certain types of high-power lithium batteries of acceptable quality or at acceptable prices from BAK New Energy, Shenzhen BAK or other suppliers.
Suppliers may also unilaterally terminate battery supply to us or increase the prices. As a result, we are not assured of an uninterrupted supply of certain types of high-power lithium batteries of acceptable quality or at acceptable prices from suppliers.
The successful development and introduction of new products and line extensions face the uncertainty of customer acceptance and reaction from competitors, as well as the possibility of cannibalization of sales of our existing products.
We have made, and will continue to make, investments in research and development with the goal of further innovation. The successful development and introduction of new products and line extensions face the uncertainty of customer acceptance and reaction from competitors, as well as the possibility of cannibalization of sales of our existing products.
Any such changes may take place quickly and with very little notice. The U.S. government, including the SEC, has made statements and taken certain actions that led to changes to United States and international relations, and will impact companies with connections to the United States or China.
The U.S. government, including the SEC, has made statements and taken certain actions that led to changes to United States and international relations, and will impact companies with connections to the United States or China. The SEC has issued statements primarily focused on companies with significant China-based operations, such as us.
Although the COVID-19 pandemic has caused disruptions to our operations, it has had limited adverse impacts on our operating results for the fiscal year ended December 31, 2022. We generated revenues of $248.73 million and $52.67 million for the fiscal years ended December 31, 2022 and 2021, respectively.
Although the COVID-19 pandemic has caused disruptions to our operations, it has had limited adverse impacts on our operating results for the fiscal year ended December 31, 2023.
We may be exposed to infringement or misappropriation claims by third parties, which, if determined adversely to us, could cause our loss of significant rights and inability to continue providing our existing product offerings. Our success also depends largely on our ability to use and develop our technology and know-how without infringing the intellectual property rights of third parties.
GENERAL RISK FACTORS We may be exposed to infringement or misappropriation claims by third parties, which, if determined adversely to us, could cause our loss of significant rights and inability to continue providing our existing product offerings.
If we were treated as a “resident enterprise” by the PRC tax authorities, we would be subject to taxation in both the U.S. and China, and our PRC tax may not be used as a credit to reduce our U.S. tax. 19 We and our stockholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.
We and our stockholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises or other assets attributed to a Chinese establishment of a non-Chinese company, or immovable properties located in China owned by non-Chinese companies.
There are uncertainties regarding the interpretation and enforcement of PRC laws, rules and regulations. Substantially all of our operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. Our PRC subsidiaries are subject to laws, rules and regulations applicable to foreign investment in China.
Substantially all of our operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. Our PRC subsidiaries are subject to laws, rules and regulations applicable to foreign investment in China. The PRC legal system is a civil law system based on written statutes.
As the Company continues to focus on innovation and renovation of its products, the Company’s business, financial condition or results of operations could be adversely affected in the event that the Company is not able to effectively develop and introduce new or renovated products and line or brand extensions.
As the Company continues to focus on innovation and renovation of its products, the Company’s business, financial condition or results of operations could be adversely affected in the event that the Company is not able to effectively develop and introduce new or renovated products and line or brand extensions. 26 Our failure, if any, to keep up with rapid technological changes and evolving industry standards may cause our products to become obsolete and less marketable, resulting in loss of market share to our competitors.
In addition, uncertainty exists as to whether the courts of China would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in China against us or such persons predicated upon the securities laws of the United States or any state thereof.
In addition, uncertainty exists as to whether the courts of China would recognize or enforce judgments of U.S. courts obtained against us or such officers and/or directors predicated upon the civil liability provisions of the securities laws of the United States or any state thereof, or be competent to hear original actions brought in China against us or such persons predicated upon the securities laws of the United States or any state thereof. 21 PRC regulation of loans to, and direct investment in, PRC entities by offshore holding companies and governmental control of currency conversion may restrict or prevent CBAK Energy Technology, Inc. from making additional capital contributions or loans to its PRC subsidiaries.
Some of these measures may benefit the overall PRC economy but may also have a negative effect on us.
The PRC government has implemented various measures to encourage economic growth and to guide the allocation of resources. Some of these measures may benefit the overall PRC economy but may also have a negative effect on us.
This acquisition may not be successful in generating revenue, income or other returns, and any resources we committed will not be available to us for other purposes.
Moreover, this acquisition involved substantial investment of funds from our previous equity financings, resulted in one-time charges and expenses. This acquisition may not be successful in generating revenue, income or other returns, and any resources we committed will not be available to us for other purposes.
The validity and scope of claims relating to lithium-ion battery technology patents involve complex scientific, legal and factual questions and analysis and, therefore, may be highly expensive and time-consuming.
Our success also depends largely on our ability to use and develop our technology and know-how without infringing the intellectual property rights of third parties. The validity and scope of claims relating to lithium-ion battery technology patents involve complex scientific, legal and factual questions and analysis and, therefore, may be highly expensive and time-consuming.
Accordingly, you should review our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done any due diligence on our company and with the understanding that none of our SEC reports, other filings or any of our other public pronouncements has been reviewed or otherwise been scrutinized by any local regulator.
Accordingly, you should review our SEC reports, filings and our other public pronouncements with the understanding that no local regulator has done any due diligence on our company and with the understanding that none of our SEC reports, other filings or any of our other public pronouncements has been reviewed or otherwise been scrutinized by any local regulator. 36 You may experience dilution to the extent that shares of the common stock are issued upon the exercise of outstanding warrants or other securities that CBAK Energy Technology, Inc. may issue in the future.
In the event that our acquisition of other companies in China falls within the scope of these regulations, compliance with these regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.
In the event that our acquisition of other companies in China falls within the scope of these regulations, compliance with these regulations to complete such transactions could be time-consuming, and any required approval processes, including approval from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share. 20 CBAK Energy Technology, Inc., as a holding company incorporated in Nevada, the United States, without material operations of its own, relies on dividends and other distributions on equity paid by its PRC operating subsidiaries for its cash needs.
The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, and control of foreign exchange and allocation of resources. The PRC government has implemented various measures to encourage economic growth and to guide the allocation of resources.
Accordingly, our financial condition and results of operations are affected to a significant extent by the economic, political and legal developments in the PRC. The PRC economy differs from the economies of most developed countries in many respects, including the extent of government involvement, level of development, growth rate, and control of foreign exchange and allocation of resources.
Late payment of applicable tax will subject the transferor to default interest. Both Bulletin 37 and Bulletin 7 do not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a transaction through a public stock exchange.
Both Bulletin 37 and Bulletin 7 do not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquired from a transaction through a public stock exchange. 23 There is uncertainty as to the application of Bulletin 37 or previous rules under Bulletin 7.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIf we were to suffer any losses or damages to any of the facilities before purchasing insurance policies that provide adequate coverage, our business, financial condition and results of operations may be materially and adversely affected. ITEM 3. LEGAL PROCEEDINGS. See Note 27 (ii) to our audited consolidated financial statements included in this report. ITEM 4. MINE SAFETY DISCLOSURES.
Biggest changeIn addition, our subsidiary, Hitrans, maintains property insurance coverage against certain property and inventory damages and losses. If we were to suffer any losses or damages to any of the facilities before purchasing insurance policies that provide adequate coverage, our business, financial condition and results of operations may be materially and adversely affected.
Our power battery manufacturing plant and packing plant in Dalian started commercial production in July 2015. We have completed the construction facilities for the Phase One of our Nanjing site, which occupies an area of 27,173 square meters. In November 2021, the Company completed the acquisition of Hitrans.
Our power battery manufacturing plant and packing plant in Dalian started commercial production in July 2015. We have completed the construction facilities for the Phase One of our Nanjing site, which occupies an area of 27,141 square meters. In November 2021, the Company completed the acquisition of Hitrans.
ITEM 2. PROPERTIES. We have completed the construction of the facilities in our Dalian site with a total area of 74,257 square meters comprising manufacturing facilities, warehousing and packaging facilities and administrative offices at the BAK Industrial Park in Dalian. Of that space, approximately 33,138 square meters are manufacturing facilities.
ITEM 2. PROPERTIES. We have completed the construction of the facilities in our Dalian site with a total area of 72,809 square meters comprising manufacturing facilities, warehousing and packaging facilities and administrative offices at the BAK Industrial Park in Dalian. Of that space, approximately 35,355 square meters are manufacturing facilities.
Business—Overview of Our Business—Expansion of Manufacturing Capabilities ” for more information related to the construction of our Nanjing facilities. We currently have insurance coverage for certain pledged machinery, equipment and buildings located at our owned facilities. We expect we will purchase related insurance for the remaining buildings when we obtain their property ownership certificates.
Business—Overview of Our Business—Expansion of Manufacturing Capabilities ” for more information related to the construction of our Nanjing facilities. We currently have insurance coverage for certain machinery, equipment and buildings located at our owned facilities. We are discussing with multiple insurance service providers aiming to secure comprehensive insurance coverage for the remaining properties.
The following table sets forth the breakdown of our facilities as of December 31, 2022 based on use: Facility Usage Area (m 2 ) Constructions completed Manufacturing 72,959 R&D and administrative 6,812 Warehousing 18,749 Other facilities 4,317 Total 102,837 Constructions completed - facilities rented Manufacturing 16,476 Warehousing 9,097 Administrative 1,723 Total 27,296 The following table presents the total acreage of facilities controlled by each of our major operating subsidiaries as of December 31, 2022: Area (m 2 ) Dalian CBAK Power facilities site area Total 74,257 Nanjing CBAK facility site area Total 27,173 Nanjing BFD facilities site area Total 123 Hitrans facilities site area Total 28,580 See also “ Item 1.
Facility Usage Area (m 2 ) Constructions completed – facilities owned Manufacturing 46,016 R&D and administrative 9,745 Warehousing 29,018 Other facilities 1,803 Total 86,582 Constructions–completed - facilities rented Manufacturing 31,743 Warehousing 9,674 Administrative 8,272 Total 49,689 The following table presents the total acreage of facilities controlled by each of our major operating subsidiaries as of December 31, 2023: Area (m 2 ) Dalian CBAK Power facilities site area Total 72,810 Nanjing CBAK facility site area Total 27,141 Nanjing BFD facilities site area Total 548 Hitrans facilities site area Total 13,772 See also “ Item 1.
Hitrans owns a manufacturing facility, warehousing, R&D and administrative offices in Zhejiang with a total area of 28,580 square meters. Of that space, approximately 22,913 square meters are manufacturing facilities. We believe that our facilities, including those under construction, meet our current business needs and will meet the needs of our expanded operations in the future.
Hitrans owns a manufacturing facility, warehousing, R&D and administrative offices in Zhejiang with a total area of 13,772 square meters. Of that space, approximately 10,660 square meters are manufacturing facilities. In July 2023, we secured a rental agreement for a facility in Shangqiu, Henan, PRC, spanning an area of 22,000 square meters.
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This space includes 12,000 square meters allocated for production purposes, specifically aimed at expanding our capacity to manufacture model 26700 cells. This strategic move is in response to the escalating demand for our battery products. Additionally, Nanjing BFD has leased a property covering 548 square meters.
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We believe that our facilities, including those under construction, meet our current business needs and will meet the needs of our expanded operations in the future. The following tables sets forth the breakdown of our facilities as of December 31, 2023 based on use.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeSecurity Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters—Securities Authorized for Issuance Under Equity Compensation Plans. ” Recent Sales of Unregistered Securities We have not sold any equity securities during the 2022 fiscal year that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the 2022 fiscal year.
Biggest changeRecent Sales of Unregistered Securities There were no unregistered sales of equity securities during the 2023 fiscal year that were not previously disclosed in a quarterly report on Form 10-Q or a current report on Form 8-K that was filed during the 2023 fiscal year.
Market Information Effective June 21, 2019, the Company’s Common Stock started trading on the Nasdaq Capital Market under the symbol “CBAT.” Approximate Number of Holders of Our Common Stock As of April 10, 2023, there were approximately 50 holders of record of our common stock, which do not include the number of stockholders holding shares of our common stock in “street name.” Dividend Policy We have never declared or paid any dividends, nor do we have any present plan to pay any cash dividends on our common stock in the foreseeable future.
Market Information Effective June 21, 2019, the Company’s Common Stock started trading on the Nasdaq Capital Market under the symbol “CBAT.” Approximate Number of Holders of Our Common Stock As of March 14, 2024, there were approximately 54 holders of record of our common stock, which do not include the number of stockholders holding shares of our common stock in “street name.” Dividend Policy We have never declared or paid any dividends, nor do we have any present plan to pay any cash dividends on our common stock in the foreseeable future.
Purchases of Equity Securities No repurchases of our common stock were made during the fiscal year of 2022. ITEM 6. [RESERVED] 33
Purchases of Equity Securities No repurchases of our common stock were made during the fiscal year of 2023. ITEM 6. [RESERVED] 40
Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant. Securities Authorized for Issuance Under Equity Compensation Plans See “ Item 12.
Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe also started construction of our Nanjing facilities in 2020. The construction work is designed to comprise two phases. The first phase project (“Phase One”) was put into operation in the second half of 2021. Phase One covers an area of approximately 27,173 square meters.
Biggest changeIn 2020, we initiated the construction of our Nanjing facilities, planned in two phases. The Phase I commenced operations in the second half of 2021, covering an area of approximately 27,173 square meters. Since then, we have been steadily increasing its production capacity to 2GWh. Construction of the Phase II began in 2022 and includes three major manufacturing plants.
Overview We are engaged in the development, manufacture and sale of new energy high power lithium batteries, as well as cathode materials and precursors for lithium batteries, which are mainly used in the following applications: ● Electric vehicles (“EV”), such as electric cars, electric buses, hybrid electric cars and buses; ● Light electric vehicles (“LEV”), such as electric bicycles, electric motors, sight-seeing cars; and ● Electric tools, energy storage including but not limited to uninterruptible power supply application, and other high-power applications.
Overview We are engaged in the development, manufacture and sale of new energy high power lithium and sodium batteries, as well as cathode materials and precursors for lithium batteries, which are mainly used in the following applications: ● Electric vehicles (“EV”), such as electric cars, electric buses, hybrid electric cars and buses; ● Light electric vehicles (“LEV”), such as electric bicycles, electric motors, electric tricycles and smaller-sized electric cars; and ● Energy storage including but not limited to residential energy supply & uninterruptible power supply application, and other high-power applications.
New revenues driven from the sale of materials used in manufacturing of lithium batteries, through the newly acquired subsidiary, Hitrans, as well as the continuous climb of sales in uninterruptible supplies and light-electric-vehicle related products, contributed to the total increase. For more details, see “ Item 1.
New revenues derived from the sale of materials used in manufacturing of lithium batteries, through the newly acquired subsidiary, Hitrans, as well as the continuous climb of sales in batteries used in residential energy supply and UPS and light-electric-vehicle related products, contributed to the total increase in net revenues. For more details, see “ Item 1.
We incurred a net loss of $11.3 million and a net profit of $61.5 million during the fiscal years ended December 31, 2022 and 2021, respectively.
We incurred a net loss of $8.5 million and $11.3 million during the fiscal years ended December 31, 2023 and 2022, respectively.
In addition, net revenues from sales of batteries for light electric vehicles was $6.4 million for the fiscal year ended December 31, 2022, as compared to $0.7 million for fiscal year ended December 31, 2021, an increase of $5.7 million, or 814%.
In addition, net revenues from sales of batteries for light electric vehicles was $5.6 million for the fiscal year ended December 31, 2023, as compared to $6.4 million for fiscal year ended December 31, 2022, a decrease of $0.1 million, or 13%.
We completed the construction of a cylindrical power battery manufacturing plant in Dalian which started commercial production in July 2015. We have received and been utilizing most of BAK Tianjin’s operating assets relocated to our Dalian facilities, including its machinery and equipment for battery production and battery pack production, customers, management team and technical staff, patents and technologies.
We completed the construction of a cylindrical power battery manufacturing plant in Dalian, which began commercial production in July 2015. We have successfully integrated most of BAK Tianjin’s operating assets into our Dalian facilities. This includes machinery and equipment for battery and battery pack production, customers, management team, technical staff, as well as patents and technologies.
We generated revenues from the manufacture and sale of high-power lithium batteries and raw materials for lithium batteries of $248.7 million and $52.7 million for the fiscal years ended December 31, 2022 and 2021, respectively.
We generated revenues from the manufacture and sale of high-power lithium and sodium batteries as well as raw materials for lithium batteries in the aggregate amounts of $204.4 million and $248.7 million for the fiscal years ended December 31, 2023 and 2022, respectively.
Business—Overview of Our Business .” Specifically, net revenue from sales of batteries for uninterruptable supplies was $83.6 million for the fiscal year ended December 31, 2022, as compared to $33.3 million for fiscal year ended December 31, 2021, an increase of $50.3 million, or 151%.
Business—Overview of Our Business .” Specifically, total net revenue from sales of batteries for residential energy supply and uninterruptable supplies was $124.5 million for the fiscal year ended December 31, 2023, as compared to $83.6 million for fiscal year ended December 31, 2022, an increase of $40.9 million, or 49%.
In addition, we completed the acquisition of 81.56% of registered equity interests (representing 75.57% of paid-up capital) in Hitrans, a leading developer and manufacturer of NCM precursor and cathode materials in China, in November 2021. As of December 31, 2022, our equity interests in Hitrans had reduced to 67.33% after Hitrans took investments from several investors. See “
We are confident that our battery segment will continue to improve its profitability as we move forward. 41 In addition, we completed the acquisition of 81.56% of registered equity interests (representing 75.57% of paid-up capital) in Hitrans, a leading developer and manufacturer of NCM precursor and cathode materials in China, in November 2021.
Net revenue from sales of cathode materials and precursors was $154.0 million for the fiscal year ended December 31, 2022, as compared to $17.9 million for fiscal year ended December 31, 2021. This increase was partly attributed to revenue from Hitrans being included for a full year in 2022, as opposed to only one month in 2021.
Net revenue from sales of cathode materials and precursors was $71.4 million for the fiscal year ended December 31, 2023, as compared to $154.0 million for fiscal year ended December 31, 2022.
In 2022, to meet a great demand for lithium-ion batteries, we have ramped up capacity in our Dalian manufacturing center and the Phase One project in Nanjing with new production lines.
In 2023, we experienced higher demand for our model 26650 lithium-ion batteries than our Dalian facilities could supply. To address this demand, we increased our capacity at both our Dalian manufacturing center and the Phase I project in Nanjing by adding new production lines.
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Since the operation of Phase One, we have been steadily increasing its production capacity to 2GWh. We started the construction of the second phase project (“Phase Two”) in 2022 and expect to complete the infrastructure of the first 60,494 square meters in the third quarter of 2023 which would be put into operation in the last quarter of 2023.
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Currently, we have three production lines in our Dalian manufacturing center, with a total capacity of 2 GWh per year. In Nanjing, our Phase I project has two production lines, capable of producing 2 GWh per year (or 1.7 GWh if one line is used exclusively for sodium battery manufacturing).
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The Nanjing facilities, once fully built, are expected to provide 20 GWh capacity to support our customers’ growing demand. In addition to construction, we have also purchased machinery and equipment for our capacity expansion.
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Additionally, we have two production lines in our Shangqiu manufacturing center, which we have rented to meet the high client demand, with a total capacity of 0.5 GWh per year.
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Moreover, given the equity and debt financings we have obtained, we believe that with the booming future market demand for high power lithium-ion products, we can continue as a going concern and return to profitability.
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The construction of the ceiling stage for the first of these three plants in Phase II was completed in 2023, and we anticipate it will commence operations in the last quarter of 2024.
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Once fully operational with these three new plants, the Nanjing facilities are expected to provide a total capacity of 20 GWh, supporting the growing demand from our customers. In 2023, our client demand for batteries soared, prompting us to rent additional manufacturing space in Shangqiu, Henan, PRC. Our Shangqiu facility has a capacity of 0.5 GWh per year.
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We have two production lines at this leased facility, and the renovation costs were covered by the owner. Additionally, subject to meeting certain criteria, the rental expenses can be offset by the taxes incurred. In addition to our construction efforts, we have also invested in machinery and equipment to expand our production capacity.
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Thanks to the booming demand from our clients, our battery segment has successfully returned to profitability in 2023.
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As of December 31, 2023, our equity interests in Hitrans had reduced to 67.33% (representing 72.99% of paid-up capital) after Hitrans accepted investments from several investors. See “

Other CBAT 10-K year-over-year comparisons