Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following management's discussion and analysis should be read in conjunction with our financial statements and the notes thereto and the other financial information appearing elsewhere in this report. Our financial statements are prepared in U.S. dollars and in accordance with U.S. GAAP.

Special Note Regarding Forward Looking Statements

Statements contained in this report include "forward-looking statements" within the meaning of such term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as "believe," "expect," "anticipate," "project," "target," "plan," "optimistic," "intend," "aim," "will" or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A, "Risk Factors" described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements.

Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.

Use of Terms

Except as otherwise indicated by the context and for the purposes of this report only, references in this report to:

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"BAK Asia" are to our Hong Kong subsidiary, China BAK Asia Holdings Limited;

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"CBAK Power" are to our PRC subsidiary, Dalian CBAK Power Battery Co., Ltd.;

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"CBAK Shangqiu" are to our PRC subsidiary, CBAK New Energy (Shangqiu) Co., Ltd.;

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"Company", "we", "us" and "our" are to the combined business of CBAK Energy Technology, Inc., a Nevada corporation, and its consolidated subsidiaries;

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"Exchange Act" are to the Securities Exchange Act of 1934, as amended.

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"Hitrans" are to our 67.33% owned PRC subsidiary, Zhejiang Hitrans Lithium Battery Technology (we hold 67.33% of registered equity interests of Hitrans, representing 72.99% of paid-up capital).

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"Nanjing BFD" are to our PRC subsidiary, Nanjing BFD New Energy Technology Co., Ltd., a company that was previously named Nanjing Daxin New Energy Automobile Industry Co., Ltd. until February 24, 2023;

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"Nanjing CBAK" are to our PRC subsidiary, Nanjing CBAK New Energy Technology Co., Ltd.;

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"NCM" are to nickel cobalt manganese.

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"RMB" are to Renminbi, the legal currency of China;

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"SEC" are to the United States Securities and Exchange Commission; and

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"U.S. dollar", "$" and "US$" are to the legal currency of the United States;

Overview

We are a manufacturer of new energy high power lithium and sodium batteries that are mainly used in light electric vehicles, electric vehicles, energy storage such as residential energy supply & uninterruptible power supply (UPS) application, and other high-power applications. Our primary product offerings consist of new energy high power lithium and sodium batteries. In addition, after completing the acquisition of 81.56% of registered equity interests (such ownership percentage thereafter reduced to 67.33% of registered equity interests (representing 72.99% of paid-up capital as of September 30, 2025)) of Hitrans in November 2021, we entered the business of developing and manufacturing NCM precursor and cathode materials. Hitrans is a leading developer and manufacturer of ternary precursor and cathode materials in China, whose products are widely used in batteries for electric vehicles, electric tools, high-end digital products and storage, among others.

As of September 30, 2025, we report financial and operational information in two segments: (i) production of high-power lithium and sodium battery cells, and (ii) manufacture and sale of materials used in high-power lithium battery cells.

We currently conduct our business primarily through (i) CBAK Power; (ii) Nanjing CBAK; (iii) CBAK Shangqiu; (iv) Nanjing BFD; and (v) Hitrans.

Financial Performance Highlights for the Quarter Ended September 30, 2025

The following are some financial highlights for the quarter ended September 30, 2025:

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Net revenues: Net revenues increased by $16.3 million, or 37%, to $60.9 million for the three months ended September 30, 2025, from $44.6 million for the same period in 2024.

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Gross profit: Gross profit was $4.9 million, representing a decrease of $2.1 million, for the three months ended September 30, 2025 from gross profit of $7.0 million for the same period in 2024.

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Operating loss: Operating loss was $4.0 million for the three months ended September 30, 2025, reflecting an increase in loss of $3.2 million from of $0.8 million for the same period in 2024.

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Net income: Net income was $2.7 million for the three months ended September 30, 2025, compared to $0.02 million for the same period in 2024.

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Fully diluted income (loss) per share: Fully diluted income per share was $0.03 for the three months ended September 30, 2025, as compared to fully diluted loss per share of $0.0 for the same period in 2024.

Financial Statement Presentation

Net revenues. The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance obligation.

Revenues from product sales are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred it the expected amortization period of the asset that it would have recognized is on year or less or the amount is immaterial.

Revenue from product sales is recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the categories: discounts and returns. These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable as the amount is payable to the Company's customer.

Cost of revenues. Cost of revenues consists primarily of material costs, employee remuneration for staff engaged in production activity, share-based compensation, depreciation and related expenses that are directly attributable to the production of products. Cost of revenues also includes write-downs of inventory to lower of cost and net realizable value.

Research and development expenses. Research and development expenses primarily consist of remuneration for R&D staff, share-based compensation, depreciation and maintenance expenses relating to R&D equipment, and R&D material costs.

Sales and marketing expenses. Sales and marketing expenses consist primarily of remuneration for staff involved in selling and marketing efforts, including staff engaged in the packaging of goods for shipment, warranty expenses, advertising cost, depreciation, share-based compensation and travel and entertainment expenses. We do not pay slotting fees to retail companies for displaying our products, engage in cooperative advertising programs, participate in buy-down programs or similar arrangements.

General and administrative expenses. General and administrative expenses consist primarily of employee remuneration, share-based compensation, professional fees, insurance, benefits, general office expenses, depreciation, liquidated damage charges and bad debt expenses.

Finance costs, net. Finance costs consist primarily of interest income and interest on bank loans, net of capitalized interest.

Income tax expenses. Our subsidiaries in PRC are subject to an income tax rate of 25%, except that Hitrans and CBAK Power were each recognized as a "High and New Technology Enterprise" and enjoy a preferential tax rate of 15% from 2024 to 2026. CBAK Nanjing obtained "High and New Technology Enterprise" certificate in late 2023 and has enjoy a preferential tax rate of 15% for three years starting from 2023. Our Hong Kong subsidiaries are subject to profits tax at a rate of 16.5%. However, because we did not have any assessable income derived from or arising in Hong Kong, the entities had not paid any such tax.

Results of Operations

Comparison of Three Months Ended September 30, 2024 and 2025

The following tables set forth key components of our results of operations for the periods indicated.

(All amounts, other than percentages, in thousands of U.S. dollars)

		Three Months Ended September 30,								Change
		2024				2025				$				%
Net revenues		$	44,628			$	60,924				16,296				37	%
Cost of revenues			(37,674	)			(56,048	)			(18,374	)			49	%
Gross profit			6,954				4,876				(2,078	)			-30	%
Operating expenses:
Research and development expenses			(3,434	)			(3,861	)			(427	)			12	%
Sales and marketing expenses			(1,023	)			(1,333	)			(310	)			30	%
General and administrative expenses			(2,779	)			(3,873	)			(1,094	)			39	%
Allowance for expected credit losses, net			(546	)			157				703				-129	%
Total operating expenses			(7,782	)			(8,910	)			(1,128	)			14	%
Operating loss			(828	)			(4,034	)			(3,206	)			387	%
Finance expenses, net			(40	)			(220	)			(180	)			450	%
Other income, net			522				6,152				5,630				1,079	%
Share of loss of equity investee			-				-				-				n/a
Gain on disposal of equity investee			-				-				-				n/a
(Loss) income before income tax			(346	)			1,898				2,244				-649	%
Income tax (expense) credit			(340	)			184				524				-154	%
Net (loss) income			(686	)			2,082				2,768				-403	%
Less: Net loss attributable to non-controlling interests			703				568				(135	)			-19	%
Net income attributable to shareholders of CBAK Energy Technology, Inc.		$	17			$	2,650				2,633				15,488	%

Net revenues. Net revenues increased by $16.3 million, or 37%, to $60.9 million for the three months ended September 30, 2025, from $44.6 million for the same period in 2024.

The following table sets forth the breakdown of our net revenues by end-product applications.

(All amounts in thousands of U.S. dollars other than percentages)

		Three months ended September 30,								Change
		2024				2025				$				%
High power lithium batteries used in:
Electric vehicles		$	334			$	57				(277	)			-83	%
Light electric vehicles			4,913				18,173				13,260				270	%
Residential energy supply & uninterruptable supplies			28,215				15,479				(12,736	)			-45	%
			33,462				33,709				247				1	%
Materials used in manufacturing of lithium batteries
Cathode			9,342				26,055				16,713				179	%
Precursor			1,824				1,160				(664	)			-36	%
			11,166				27,215				16,049				144	%
Total		$	44,628			$	60,924				16,296				37	%

Net revenues from sales of batteries for electric vehicles were approximately $0.3 million and $0.06 million for the three months ended September 30, 2024 and 2025, respectively.

Net revenues from sales of batteries for light electric vehicles were $18.2 million for the three months ended September 30, 2025, as compared to $4.9 million in the same period of 2024, marking an increase of $13.3 million, or 270%. We strive to continue to penetrate the market for batteries used in light electric vehicles, especially the international markets such as India and Vietnam. We believe that our sales campaign in the international markets has contributed to a rebound in our sales volume in this sector.

Net revenues from sales of batteries for residential energy supply & uninterruptable power supplies were $15.5 million in the three months ended September 30, 2025, as compared with $28.2 million in the same period in 2024, representing a decrease of $12.7 million, or 45%. The substantial decline primarily stems from production changes at our Dalian facilities, where a major portion of its customers are in the residential energy supply sector. These facilities are currently undergoing a product portfolio upgrade, transitioning from Model 26650, a battery model used for about two decades, to Model 40135, a much larger and modern model that the current market prefers, for our customers.

Net revenues from sales of materials used in manufacturing of lithium batteries were $27.2 million for the three months ended September 30, 2025, as compared to $11.2 million for the same period of 2024, representing an increase of $16.0 million, or 144%. The Company's raw materials division, Hitrans, has been making significant efforts to expand its market presence. In the third quarter and the first half of 2025, Hitrans successfully secured several new customers, which contributed to the growth in net revenues from raw materials sales. Additionally, a slight decline in raw material prices for Hitrans's products during the first half of 2025 further stimulated customer demand and encouraged order placements.

Cost of revenues. Cost of revenues increased to $56.1 million for the three months ended September 30, 2025, as compared to $37.7 million for the same period in 2024, an increase of $18.4 million, or 49%. The cost of revenues includes write down of obsolete inventories of $1.2 million for the three months ended September 30, 2025, as compared to write down of obsolete inventories of $1.4 million for the same period in 2024. We write down the inventory value whenever there is an indication that it is impaired.

Gross profit. Gross profit for the three months ended September 30, 2025 was $4.9 million, or 8.0% of net revenues as compared to gross profit of $7.0 million, or 15.6% of net revenues, for the same period in 2024. The significant decline in gross profits aligns with the substantial drop in sales of batteries for residential energy supply and uninterruptible power supplies, which have a higher gross profit margin compared to other products. We expect gross profit margins to gradually recover upon the upgrade from Model 26650 to Model 40135.

Research and development expenses. Research and development expenses were $3.9 million for the three months ended September 30, 2025, increased by $0.5 million as compared to $3.4 million for the three months ended September 30, 2024. The increase primarily resulted from the increase of materials and consumables used for the development of series 40 batteries. The materials and consumables used were $0.9 million and $0.5 million for the three months ended September 30, 2025 and 2024, respectively.

Sales and marketing expenses. Sales and marketing expenses increased to $1.3 million for the three months ended September 30, 2025, as compared to approximately $1.0 million for the same period in 2024, an increase of approximately $0.3 million, or 30%. The increase was mainly resulted from the delivery and declaration expenses incurred for the sales to India and Africa. The delivery and declaration expenses for these countries were higher compared to others.

General and administrative expenses. General and administrative expenses increased to $3.9 million, or 6.4% of revenues, for the three months ended September 30, 2025, increased by $1.1 million as compared to $2.8 million, or 6.2% of revenues, for the same period in 2024. The increase primarily resulted from salaries and social insurance expenses due to a growing number of employees at Nanjing CBAK and CBAK Power on the new production lines. We incurred $1.8 million in salaries and social insurance cost (including share-based compensation) during the three months ended September 30, 2025 compared to $1.4 million during the three months ended September 30, 2024. With the expansion of our business, operating expenses, including lease expenses, travelling, utilities and other tax increased by $0.3 million for the three months ended September 30, 2025 compared to the same period in 2024.

Allowance for expected credit losses, net. We have a reversal on allowance of credit loss of $0.2 million for the three months ended September 30, 2025 compared to an allowance of $0.5 million for the three months ended September 30, 2024. 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 was $4.0 million for the three months ended September 30, 2025, as compared to $0.8 million for the same period in 2024, representing a $3.2 million increase in loss or 387%.

Finance income (expenses), net. Finance expenses, net was $219,768 for the three months ended September 30, 2025, as compared to $40,350 for the same period in 2024. The finance expenses increase mainly resulted from the decrease in the interest capitalization for the three months ended September 30, 2025. We capitalized interest on bank borrowings of $7,252 and $169,159 to the cost of construction in progress for the three months ended September 30, 2025 and 2024, respectively.

Other income (expenses), net. Other income was $6.2 million for the three months ended September 30, 2025, compared to $0.5 million for the same period in 2024. For the three months ended September 30, 2025, we received a $5.0 million compensation from a cancelled order from our customer.

Income tax credit (expenses). Income tax credit was $0.2 million compared to an income tax expense of $0.3 million for the three months ended September 30, 2025 and 2024, respectively. The income tax credit was from our batteries segment on the finalization of the income tax for the fiscal 2024 whereas tax expense for the three months ended September 30, 2024 were incurred by our batteries segment.

Net income (loss). As a result of the foregoing, we had a net income of $2.7 million for the three months ended September 30, 2025, compared to a net income of $17,647 for the same period in 2024.

Comparison of Nine Months Ended September 30, 2024 and 2025

The following tables set forth key components of our results of operations for the periods indicated.

(All amounts, other than percentages, in thousands of U.S. dollars)

		Nine Months Ended September 30,								Change
		2024				2025				$				%
Net revenues		$	151,244			$	136,387				(14,857	)			-10	%
Cost of revenues			(112,780	)			(122,247	)			(9,467	)			8	%
Gross profit			38,464				14,140				(24,324	)			-63	%
Operating expenses:
Research and development expenses			(9,205	)			(10,499	)			(1,294	)			14	%
Sales and marketing expenses			(4,115	)			(3,180	)			935				-23	%
General and administrative expenses			(10,002	)			(11,028	)			(1,026	)			10	%
Allowance for expected credit losses, net			241				140				(101	)			-42	%
Total operating expenses			(23,081	)			(24,567	)			(1,486	)			6	%
Operating income (loss)			15,383				(10,427	)			(25,810	)			-168	%
Finance income (expenses), net			658				(338	)			(996	)			-151	%
Other income, net			1,031				7,218				6,187				600	%
Share of (loss) income of equity investee			(19	)			34				53				-279	%
Gain on disposal of equity investee			46				-				(46	)			-100	%
Income (loss) before income tax			17,099				(3,513	)			(20,612	)			-121	%
Income tax (expense) credit			(2,189	)			184				2,373				-108	%
Net income (loss)			14,910				(3,329	)			(18,239	)			-122	%
Less: Net loss attributable to non-controlling interests			1,389				1,327				(62	)			-4	%
Net income (loss) attributable to shareholders of CBAK Energy Technology, Inc.		$	16,299			$	(2,002	)			(18,301	)			-112	%

Net revenues. Net revenues decreased by $14.9 million, or 10%, to $136.4 million for the nine months ended September 30, 2025, from $151.2 million for the same period in 2024.

The following table sets forth the breakdown of our net revenues by end-product applications.

(All amounts in thousands of U.S. dollars other than percentages)

		Nine months ended September 30,								Change
		2024				2025				$				%
High power lithium batteries used in:
Electric vehicles		$	1,013				737				(276	)			-27	%
Light electric vehicles			8,249				23,444				15,195				184	%
Residential energy supply & uninterruptable supplies			104,636				50,981				(53,655	)			-51	%
			113,898				75,162				(38,736	)			-34	%
Materials used in manufacturing of lithium batteries
Cathode			26,777				54,609				27,832				104	%
Precursor			10,569				6,616				(3,953	)			-37	%
			37,346				61,225				23,879				64	%
Total		$	151,244				136,387				(14,857	)			-10	%

Net revenues from sales of batteries for electric vehicles were approximately $1.0 million and $0.7 million for the nine months ended Septembers 30, 2024 and 2025, respectively.

Net revenues from sales of batteries for light electric vehicles were $23.4 million for the nine months ended September 30, 2025, as compared to $8.2 million in the same period of 2024, marking an increase of $15.2 million, or 184%. We strive to continue to penetrate the market for batteries used in light electric vehicles, especially the international markets such as India and Vietnam. We believe that our sales campaign in the international market has contributed to a rebound in our sales volume in this sector.

Net revenues from sales of batteries for residential energy supply & uninterruptable power supplies were $51.0 million in the nine months ended September 30, 2025, as compared with $104.6 million in the same period in 2024, representing a decrease of $53.7 million, or 51%. The substantial decline primarily stems from production changes at our Dalian facilities, where a major portion of its customers are in the residential energy supply sector. These facilities are currently undergoing a product portfolio upgrade, transitioning from Model 26650, a battery model used for about two decades, to Model 40135, a much larger and modern model that the current market prefers, for our customers.

Net revenues from sales of materials used in manufacturing of lithium batteries were $61.2 million for the nine months ended September 30, 2025, as compared to $37.3 million for the same period of 2024, an increase of $23.9 million or 64%. The Company's raw materials division, Hitrans, has been making significant efforts to expand its market presence. During the nine months ended September 30, 2025, Hitrans successfully secured several new customers, which contributed to the growth in net revenues from raw materials sales. Additionally, a slight decline in raw material prices for Hitrans's products during the first half of 2025 further stimulated customer demand and encouraged order placements.

Cost of revenues. Cost of revenues increased to $122.2 million for the nine months ended September 30, 2025, as compared to $112.8 million for the same period in 2024, an increase of $9.5 million, or 8%. The cost of revenues includes write off of obsolete inventories of $3.7 million for nine months ended September 30, 2025, as compared to $3.4 million for the same period in 2024. We write down the inventory value whenever there is an indication that it is impaired.

Gross profit. Gross profit for the nine months ended September 30, 2025 was $14.1 million, or 10.4% of net revenues as compared to gross profit of $38.5 million, or 25.4% of net revenues, for the same period in 2024. The gross profit decreased as our Dalian facilities received fewer orders for Model 26650, resulting in lower production line utilization and higher unit costs.

Research and development expenses. Research and development expenses increased to $10.5 million for the nine months ended September 30, 2025, as compared to approximately $9.2 million for the same period in 2024, an increase of $1.3 million, or 14%. The increase primarily resulted from an increase of $0.5 million in salaries and social insurance expenses due to a growing number of employees at Nanjing CBAK and CBAK Power's development of series 40 batteries as well as a $0.7 million increase in materials and consumables used by batteries segment and Hitrans.

Sales and marketing expenses. Sales and marketing expenses decreased to approximately $3.2 million for the nine months ended September 30, 2025, as compared to approximately $4.1 million for the same period in 2024, a decrease of approximately $0.9 million, or 23%. The marketing expenses decreased corresponding to the decrease of revenue and remains at 3% for each of the nine months ended September 30, 2024 and 2025, as a percentage of revenues.

General and administrative expenses. General and administrative expenses increased to $11.0 million, or 8.1% of revenues, for the nine months ended September 30, 2025, as compared to $10.0 million, or 6.6% of revenues, for the same period in 2024, representing an increase of $1.0 million, or 10% increase. The increase primarily resulted from salaries and social insurance expenses due to a growing number of employees at Nanjing CBAK and CBAK Power on the new production lines. We incurred $4.7 million in salaries and social insurance cost (including share-based compensation) during the nine months ended September 30, 2025 compared to $4.9 million during the nine months ended September 30, 2024. With the expansion of our business, operating expenses, including lease expenses, travelling, utilities and other tax increased by $0.2 million for the nine months ended September 30, 2025 compared to the same period in 2024.

Allowance for expected credit losses, net. We had $0.1 million on allowance for expected credit losses for the nine months ended September 30, 2025 compared to $0.2 million for the nine months ended September 30, 2024. We determine the allowance based on historical write-off experience, customer specific facts and economic conditions.

Operating income (loss). As a result of the above, our operating loss was $10.4 million for the nine months ended September 30, 2025 compared to an operating income of $15.4 million for the nine months ended September 30, 2024, representing a decrease in income of $25.8 million, or 168%.

Finance income (expenses), net. Finance expenses, net was $0.3 million for the nine months ended September 30, 2025, as compared to a finance income, net $0.7 million for the same period in 2024, representing a decrease in income of $1.0 million. The finance expenses increase mainly resulted from decrease of our interest income from our term-deposits. We capitalized interest on bank borrowings of $189,129 and $640,938 to the cost of construction in progress for the nine months ended September 30, 2025 and 2024, respectively.

Other income (expenses), net. Other income was $7.2 million and $1.0 million for the nine months ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025, we received a $5.0 million compensation from a cancelled order from a customer and $0.6 million from trading of materials and received $1.1 million government assistance. For the nine months ended September 30, 2024, we received government assistance of $0.5 million and $0.2 million income from trading of materials.

Income tax credit (expense). Income tax credit was $0.2 million for the nine months ended September 30, 2025 compared to an income tax expense of $2.2 million for the nine months ended September 30, 2024. The income tax credit and expenses were incurred by our batteries segment.

Net income (loss). As a result of the foregoing, we had a net loss of $2.0 million for the nine months ended September 30, 2025 compared to a net income of $16.3 million for the same period in 2024.

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, advances from our related and unrelated parties, investors and issuance of capital stock and other equity-linked securities.

We incurred a net loss of $2.0 million for the nine months ended September 30, 2025. As of September 30, 2025, we had cash and cash equivalents of $63.3 million. Our total current assets were $157.7 million and our total current liabilities were $228.0 million as of September 30, 2025, resulting in a net working capital deficit of $70.3 million.

As of September 30, 2025, we had an accumulated deficit of $126.4 million. We had an accumulated deficit from recurring net losses, a working capital deficiency and significant short-term debt obligations maturing in less than one year as of September 30, 2025. These factors raise substantial doubts about our ability to continue as a going concern. The report from our independent registered public accounting firm for the year ended December 31, 2024 included an explanatory paragraph in respect of the substantial doubt of our ability to continue as a going concern.

These condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Lending from Financial Institutions

In January 2023, Hitrans renewed the banking facilities with Shaoxing Branch of Bank of Communications Co., Ltd with a maximum amount of RMB160.0 million (approximately $22.1 million) with the term from January 2023 to December 2027. On January 22, 2025, Hitrans and Bank of Communications entered into a new banking facilities for another five years from January 22, 2025 to January 22, 2030 for a maximum guarantee of loan amount to RMB155.8 million (approximately $21.5 million). The facility was secured by Hitrans's land use rights and buildings. Under the facility, Hitrans borrowed RMB159.9 million (approximately $21.9 million) and RMB147.7 million (approximately $20.7 million ) as of December 31, 2024 and September 30, 2025, respectively, bearing interest at 2.5% to 3.45% per annum expiring through January to June 2026.

On January 17, 2022, Nanjing CBAK 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 former CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan and secured by an unrelated third party, Jiangsu Credits Financing Guarantee Co., Ltd. Nanjing CBAK borrowed RMB10 million (approximately $1.4 million) on January 20, 2022 for a term until January 16, 2023. Nanjing CBAK repaid RMB10 million (approximately $1.4 million) early on January 5, 2023. On January 6, 2023, Nanjing CBAK 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. Nanjing CBAK repaid the loan on January 4, 2024.

On February 9, 2022, NJ CBAK 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 the Company's former CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. Nanjing CBAK borrowed RMB10 million (approximately $1.4 million) on February 17, 2022 for a term until January 28, 2023. Nanjing CBAK repaid RMB10 million (approximately $1.4 million) on January 16, 2023. On January 17, 2023, Nanjing CBAK 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. Nanjing CBAK repaid the loan on January 13, 2024.

On April 28, 2022, Nanjing CBAK obtained a three-year term facility from Industrial and Commercial Bank of China Nanjing Gaochun branch, with a maximum amount of RMB12 million (approximately $1.7 million) with the term from April 21, 2022 to April 21, 2025. The facility was guaranteed by the Company's former CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. Under the facility, Nanjing CBAK borrowed RMB10 million (approximately $1.5 million) on April 29, 2022, bearing interest at 3.95% per annum for a term until April 29, 2023. Nanjing CBAK repaid RMB10 million (approximately $1.4 million) on April 19, 2023. On April 20, 2023, Nanjing CBAK 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. Nanjing CBAK repaid the loan on April 19, 2024.

Nanjing CBAK 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. The facility was guaranteed by 100% equity in CBAK Nanjing held by BAK Investment and the Company's former CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. Nanjing CBAK borrowed RMB9 million (approximately $1.3 million ) on September 27, 2023 for a term until August 31, 2024. Nanjing CBAK repaid the loan on August 31, 2024.

Hitrans entered into a loan agreement with China CITIC Bank Shaoxing Branch for a short-term loan of RMB4.8 million (approximately $0.7 million) from August 10, 2023 to May 2, 2024, bearing interest rate at 4.3% per annum. Hitrans repaid the loan on May 2, 2024.

On January 7, 2023, Nanjing CBAK 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 the Company's former CEO, Mr. Yunfei Li, Mr. Yunfei Li's wife Ms. Qinghui Yuan and CBAK Nanjing. Nanjing CBAK 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. Nanjing CBAK repaid the above early on June 15, 2023. On June 27, 2023, Nanjing CBAK entered into another loan agreement for one year from June 27, 2023 to June 26, 2024 under the two-year term facility for a maximum loan amount of RMB10 million (approximately $1.4 million) bearing interest rate at 3.65 % pr annum. Nanjing CBAK borrowed RMB10 million (approximately $1.4 million) on the same date. The loan was guaranteed by the Company's former CEO, Mr. Yunfei Li, Mr. Yunfei Li's wife Ms. Qinghui Yuan and CBAK Nanjing. Nanjing CBAK repaid the loan on June 26, 2024.

On March 28, 2024, CBAK New Energy and Bank of China Limited entered into a short-term loan agreement for one year from March 29, 2023 to March 28, 2024 for a maximum loan amount to RMB5 million (approximately $0.7 million) bearing interest rate at 3.65% per annum. CBAK New Energy borrowed RMB5 million (approximately $0.7 million) on the same date. The loan was secured by CBAK Power's buildings in Dalian. CBAK New Energy repaid RMB5 million (approximately $0.7 million) on March 27, 2024. On March 28, 2024, CBAK New Energy borrowed another one-year loan of RMB5 million (approximately $0.7 million) bearing interest rate at 3.45% per annum. CBAK New Energy early repaid the loan on August 21, 2024.

On April 19, 2023, Nanjing CBAK and Bank of Nanjing Gaochun Branch entered into a short-term loan agreement for one year from April 10, 2023 to April 9, 2024 for RMB10 million (approximately $1.4 million) bearing interest rate at 3.7% per annum. Nanjing CBAK borrowed RMB10 million (approximately $1.4 million) on April 23, 2023. The loan was guaranteed by the Company's former CEO, Mr. Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. Nanjing CBAK repaid the loan on April 9, 2024.

On July 31, 2023, Nanjing CBAK obtained a three-year term facility from Bank of China Gaochun Branch, with a maximum amount of RMB10 million (approximately $1.4 million) with the term from July 31, 2023 to July 30, 2026. The facility was guaranteed by the Company's former CEO, Mr, Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. Under the facility, Nanjing CBAK borrowed RMB10 million (approximately $1.4 million) on July 31, 2023, bearing interest rate at 3.15% per annum. Nanjing CBAK repaid the loan on July 22, 2024.

On August 3, 2023, CBAK Energy and Bank of China entered into a short term loan agreement for one year from August 3, 2023 to August 2, 2024 for a maximum amount of RMB10 million (approximately $1.4 million) bearing interest rate at 3.55% per annum. CBAK Energy borrowed RMB10 million (approximately $1.4 million) on September 27, 2023. The loan was secured by CBAK Power's buildings in Dalian. CBAK Energy repaid the loan on August 2, 2024.

On January 24, 2024, Hitrans entered into a short-term credit-guaranteed loan agreement with Zhejiang Shangyu Rural Commercial Bank for one year to January 17, 2025 with an amount of RMB5 million (approximately $0.7 million) bearing interest at 4.1% per annum. Hitrans borrowed RMB5 million (approximately $0.7 million) on the same date. Hitrans early repaid the loan on September 27, 2024.

On March 26, 2024, Hitrans entered into a short-term credit-guaranteed loan agreement with Zhejiang Shangyu Rural Commercial Bank for one year to March 25, 2025 with an amount of RMB5 million (approximately $0.7 million) bearing interest at 4.1% per annum. Hitrans borrowed RMB5 million (approximately $0.7 million) on the same date. Hitrans early repaid the loan on September 27, 2024.

On April 9, 2024, Hitrans and China Zheshang Bank Co., Ltd Shangyu Branch entered into a short-term loan agreement for one year from April 9, 2024 to April 7, 2025 for a maximum loan amount to RMB5.5 million (approximately $0.8 million) bearing interest rate at 4.05% per annum. Hitrans borrowed RMB5.5 million (approximately $0.8 million) on the same date. Hitrans early repaid the loan on January 24, 2025.

On June 24, 2024, CBAK Nanjing and Bank of China entered into a short-term loan agreement, with a maximum amount of RMB10 million (approximately $1.4 million) with the term from June 24, 2024 to June 20, 2025.The loan was guaranteed by the Company's former CEO, Mr, Yunfei Li and Mr. Yunfei Li's wife Ms. Qinghui Yuan. Under the facility, CBAK Nanjing borrowed RMB10 million (approximately $1.4 million) on June 24, 2024, bearing interest rate at 3.0% per annum. CBAK Nanjing early repaid the loan on August 23, 2024.

On September 29, 2024, Hitrans and Zhejiang Shangyu Rural Commercial Bank entered into a short-term credit-guaranteed loan agreement for RMB15 million (approximately $2.0 million) with the term of one year from September 29, 2024 to September 26, 2025 bearing 4.00% interest rate. Hitrans borrowed RMB15 million (approximately $2.1 million) on the same date. Hitrans repaid the loan on September 26, 2025.

On December 31, 2024, Hitrans and China Everbright Bank Co., Ltd Shaoxing Branch entered into a short-term loan agreement for RMB10 million (approximately $1.4 million) with the term of one year from December 31, 2024 to December 30, 2025 bearing 2.9% interest rate. Hitrans borrowed RMB10 million (approximately $1.4 million) on the same date.

On January 17, 2025, Hitrans entered into a long-term Maximum Pledge Agreement with Zhejiang Shangyu Rural Commercial Bank, for the period from January 17, 2025 to September 25, 2027, with a maximum facility amount of RMB76.56 million (approximately $10.54 million). The facility was secured by the land use right and buildings of Hitrans. Hitrans has borrowed RMB43.9 million (approximately $6.2 million) as of September 30, 2025, bearing interest rate at 2.85%-3.6% per annum, of which RMB10 million (approximately $1.4 million) repayable on January 16, 2026, RMB30 million (approximately $4.2 million) repayable on September 25, 2027 and the remaining RMB3.9 million (approximately $0.5 million) repayable on June 20, 2027.

On January 20, 2025, Nanjing CBAK entered into an unsecured revolving loan agreement with Bank of Ningbo Co., Ltd. Gaochun Branch with a maximum amount of RMB10 million (approximately $1.4 million) bearing interest at 2.8% per annum (LPR interest rate -30 bp), with a one-year loan period ending on January 20, 2026. Nanjing CBAK borrowed RMB10 million (approximately $1.4 million) under this loan agreement on January 20, 2025. Nanjing CBAK early repaid the loan on September 20, 2025.

On February 19, 2025, Nanjing CBAK obtained a RMB30 million facility (approximately $4.1 million) from Jiangsu Gaochun Rural Commercial Bank, with the term from February 19, 2025 to September 23, 2027. The facility was guaranteed by 100% equity in CBAK Nanjing held by BAK Investment. Nanjing CBAK borrowed RMB3 million (approximately $0.4 million ) as of September 30, 2025, bearing interest rate at 2.98% per annum, repayable on May 19, 2026.

On February 25, 2025, Hitrans entered into a short-term factoring loan agreement with China Construction Bank Co., Ltd for a maximum amount of RMB10 million (approximately $1.4 million) for a period of one year from February 28, 2025 to February 27, 2026, bearing interest of 3.7% per annum. Hitrans borrowed RMB10 million (approximately $1.4 million) on the same date.

On June 28, 2025, Nanjing CBAK entered into a short-term loan agreement with Agricultural Bank of China Co., Limited for RMB12 million (approximately $1.7 million) from June 28, 2025 to June 26, 2026, bearing interest 2.60% per annum. Nanjing CBAK borrowed RMB12 million (approximately $1.7 million) on the same date. Nanjing CBAK early repaid the loan on July 18, 2025.

On June 30, 2025, CBAK Power obtained a banking facility from China Guangfa Bank Co., Ltd with a maximum amount of RMB100 million (approximately $14 million) for a term to June 12, 2026 for short-term borrowings and issuance of acceptance bills to settle materials suppliers, guaranteed by Power's buildings and pledged deposits. CBAK Power borrowed HKD 10 million (approximately $1.4 million) from the above facility as of September 30, 2025, bearing interest at 2.15% per annum, repayable on August 14, 2026. CBAK Power has borrowed a series of bills $103.0 million (approximately $14.5 million) for various terms expiring through January to March 2026, which was secured by CBAK Power's buildings and ledged deposit of RMB20.6 million (approximately $2.9 million).

On July 30, 2025, Hitrans entered into a short-term loan agreement with Industrial Bank Co., Ltd for RMB10 million (approximately $1.4 million) for a period of one year bearing interest of 3% per annum. Hitrans borrowed RMB10 million (approximately $1.4 million) on July 31, 2025.

On August 21, 2025, CBAK Power entered into a short-term loan agreement with China Construction Bank for RMB10 million (approximately $1.4 million) for a period of one year, bearing interest of 2.2% per annum. CBAK Power borrowed RMB10 million (approximately $1.4 million) on August 29, 2025 and repayable on August 19, 2026.

CBAK Power and Nanjing CBAK obtained banking facilities from China Zheshang Bank Co., Ltd. Shenyang Branch with a maximum amount of RMB690 million (approximately $96.3 million) with the term to March 16, 2026. CBAK Power and Nanjing CBAK borrowed a series of acceptance bills totaling RMB108.3 million (approximately $15.2 million) for various terms expiring through October 2025 to March 2026, which was secured by the CBAK Power's and Nanjing CBAK's pledged deposit of RMB104.9 million (approximately $14.7 million) and CBAK Power's and Nanjing CBAK's bills receivables of RMB7.2 million (approximately $1.0 million).

Hitrans renewed the banking facilities from China Zheshang Bank Co., Ltd. Shangyu Branch with a maximum amount of RMB150 million (approximately $20.9 million) with the term to May 28, 2026. Hitrans borrowed a series of acceptance bills totaling RMB93.9 million (approximately $13.2 million) for various terms expiring through October 2025 to March 2026, which was secured by Hitrans's pledged deposit of RMB93.9 million (approximately $13.2 million).

Nanjing CBAK borrowed a series of acceptance bills from Bank of Nanjing totaling RMB40.5 million (approximately $5.7 million) for various terms expiring through October 2025 to March 2026, which was secured by Nanjing CBAK's pledged deposit of RMB30.7 million (approximately $4.3 million) and the balance guaranteed by 100% equity in CBAK Nanjing held by BAK Investment.

Nanjing CBAK borrowed a series of acceptance bills from Bank of Ningbo totaling RMB24.5 million (approximately $3.4 million) for various terms expiring through October 2025 to March 2026, which was secured by Nanjing CBAK's pledged deposit of RMB24.5 million (approximately $3.4 million).

Hitrans borrowed a series of acceptance bills from Bank of Communications Co., Ltd. Shangyu Branch totaling RMB43.2 million (approximately $6.1 million) expiring through October 2025 to February 2026, which was secured by Hitrans's pledged deposit of RMB43.2 million (approximately $6.1 million).

Hitrans borrowed a series of acceptance bills from China CITIC Bank Co., Ltd totaling RMB3.2 million (approximately $0.5 million) expiring in November 2025, which was secured by Hitrans's pledged deposit of RMB1.4 million (approximately $0.2 million) and bills receivables of RMB1.8 million (approximately $0.2 million).

Hitrans borrowed a series of acceptance bills from Zhejiang Shangyu Rural Commercial Bank Co., Ltd totaling RMB20.0 million (approximately $2.8 million) expiring through October 2025 to March 2026, which was secured by Hitrans's pledged deposit of RMB20.0 million (approximately $2.8 million).

CBAK Power borrowed a series of acceptance bills from Industrial and Commercial Bank of China totaling RMB10.9 million (approximately $1.5 million) expiring through January to March 2026, which was secured by CBAK Power's pledged deposit of RMB10.9 million (approximately $1.5 million).

Hitrans borrowed a series of acceptance bills from Industrial Bank totaling RMB16.0 million (approximately $2.3 million) expiring in March 2026, which was secured by Hitrans's pledged deposit of RMB11.0 million (approximately $1.5 million).

Nanjing CBAK borrowed a series of acceptance bills from Agricultural Bank of China totaling RMB26.5 million (approximately $3.7 million) expiring through January to March 2026, which was secured by Nanjing CBAK's pledged deposit of RMB7.8 million (approximately $1.1 million) and the balance guaranteed by 100% equity in CBAK Naning held by BAK Investment.

Nanjing CBAK obtained a letter of credit from Bank of Ningbo of RMB5 million (approximately $0.7 million) for settlement of materials purchase bearing interest rate at 1.15% per for a period of one year from to September 18, 2026, which was secured by Nanjing CBAK's pledged deposit of RMB5 million (approximately $0.7 million).

As of September 30, 2025, we had unutilized committed banking facilities of $20.2 million. We plan to renew these loans upon maturity and intend to raise additional funds through bank borrowings in the future to meet our daily cash demands, if required.

Equity and Debt Financings from Investors

We have also obtained funds through private placements, registered direct offerings and other equity and note financings.

On December 8, 2020, we entered into a securities purchase agreement with certain institutional investors, pursuant to which we issued in a registered direct offering, an aggregate of 9,489,800 shares of common stock of the Company at a per share purchase price of $5.18, and warrants to purchase an aggregate of 3,795,920 shares of common stock of the Company at an exercise price of $6.46 per share exercisable for 36 months from the date of issuance (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.

On February 8, 2021, we entered into another securities purchase agreement with the same investors, pursuant to which we issued in a registered direct offering, an aggregate of 8,939,976 shares of common stock of the Company at a per share purchase price of $7.83. In addition, we issued to the investors (i) in a concurrent private placement, the Series A-1 warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of $7.67 and exercisable for 42 months from the date of issuance; (ii) in the registered direct offering, the Series B warrants to purchase a total of 4,469,988 shares of common stock, at a per share exercise price of $7.83 and exercisable for 90 days from the date of issuance; and (iii) in the registered direct offering, the Series A-2 warrants to purchase up to 2,234,992 shares of common stock, at a per share exercise price of $7.67 and exercisable for 45 months from the date of issuance. We received gross proceeds of approximately $70 million from the registered direct offering and the concurrent private placement, before deducting fees to the placement agent and other offering expenses payable by the Company.

As of December 31, 2024, all the warrants described above had expired without being exercised.

Summary of Cash Flows

We currently are expanding our production lines and manufacturing capacity in our Dalian, Nanjing, Zhejiang and Anhui facilities, which requires additional funding to finance the expansion. We may also require additional cash due to changing business conditions or other future developments, including any investments or acquisitions we may decide to pursue. We plan to renew our existing loans upon maturity, if required, and plan to raise additional funds through bank borrowings and equity financing in the future to meet our daily cash demands, if required. However, there can be no assurance that we will be successful in obtaining this financing. If our existing cash and bank borrowing are insufficient to meet our requirements, we may seek to sell equity securities, debt securities or borrow from lending institutions. We can make no assurance that financing will be available in the amounts we need or on terms acceptable to us, if at all. The sale of equity securities, including convertible debt securities, would dilute the interests of our current shareholders. The incurrence of debt would divert cash for working capital and capital expenditures to service debt obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to our shareholders. If we are unable to obtain additional equity or debt financing as required, our business operations and prospects may suffer.

The accompanying condensed consolidated financial statements have been prepared assuming we will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty related to our ability to continue as a going concern.

The following table sets forth a summary of our cash flows for the periods indicated:

(All amounts in thousands of U.S. dollars)

		Nine Months Ended September 30,
		2024				2025
Net cash provided by operating activities		$	30,078			$	18,747
Net cash used in investing activities			(20,112	)			(29,054	)
Net cash (used in) provided by financing activities			(21,463	)			10,202
Effect of exchange rate changes on cash and cash equivalents			538				2,668
Net (decrease) increase in cash and cash equivalents and restricted cash			(10,959	)			2,563
Cash and cash equivalents and restricted cash at the beginning of period			58,823				60,786
Cash and cash equivalents and restricted cash at the end of period		$	47,864			$	63,349

Operating Activities

Net cash provided by operating activities was $18.7 million in the nine months ended September 30, 2025. The net cash provided by operating activities for the nine months ended September 30, 2025 was mainly attributable to our net income of $5.8 million (before non-cash depreciation and amortization, recovery from doubtful debts, write-down of inventories and share-based compensation), $8.9 million decrease of prepayments and other receivables and $31.1 million increase of trade and bills payable offset by the increase of trade and bills receivable and inventories by $29.4 million.

Net cash provided by operating activities was $30.1 million in the nine months ended September 30, 2024. The net cash provided by operating activities for the nine months ended September 30, 2024 was mainly attributable to our net income of $24.1 million (before non-cash depreciation and amortization, allowance for expected credit losses, write-down of inventories, share-based compensation, gain on disposal of machines and investment in equity investees) and $6.3 million increased of trade and bills payable.

Investing Activities

Net cash used in investing activities was $29.1 million for the nine months ended September 30, 2025. The net cash used in investing activities comprised mainly the purchases of property, plant and equipment, construction in progress and land use right $32.0 million offset by the government subsidy $2.8 million received.

Net cash used in investing activities was $20.1 million for the nine months ended September 30, 2024. The net cash used in investing activities comprised the purchases of property, plant and equipment and construction in progress $11.5 million and $9.1 million on deposit paid for acquisition of long-term investments.

Financing Activities

Net cash provided by financing activities was $10.2 million in the nine months ended September 30, 2025. The net cash provided by financing activities was mainly attributable to $45.8 million bank borrowings, $43.6 million from the maturity of the term deposits offset by $38.5 million repayment of bank borrowings and $39.2 million placement of term deposits.

Net cash used in financing activities was $21.5 million in the nine months ended September 30, 2024. The net cash used in financing activities was mainly attributable to $13.5 million, net on placement of term deposits, $47.9 million repayment of bank borrowings and $2.1 million repayment on finance leases offset by $40.9 million advances from bank borrowings and $1.1 million proceeds from finance lease.

As of September 30, 2025, the principal amounts outstanding under our credit facilities and lines of credit were as follows:

(All amounts in thousands of U.S. dollars)

		Maximum amount available				Amount borrowed
Long-term credit facilities:
Shaoxing Branch of Bank of Communications Co., Ltd		$	21,876			$	20,736
Jiangsu Gaochun Rural Commercial Bank			4,213				421
Zhejiang Shangyu Rural Commercial Bank			10,752				6,165
			36,841				27,322
Short-term credit facilities:
Agricultural Bank of China Nanjing Gaochun Branch			1,404				1,404
Zhejiang Shangyu Rural Commercial Bank			1,404				1,404
China Everbright Bank Co., Ltd. Shaoxing Branch			1,404				1,404
China Construction Bank Co., LTD. Shaoxing Branch			10,949				1,404
Ningbo Bank Co., Ltd Nanjing Gaochun Branch			1,391				1,391
			16,552				7,007
Other lines of credit:
Bank of Ningbo Co., Ltd			4,140				4,140
China Zheshang Bank Co., Ltd. Shenyang Branch			15,206				15,206
Bank of Nanjing Gaochun Branch			5,684				5,684
Zhejiang Shangyu Rural Commercial Bank			2,809				2,809
China Zheshang Bank Co., Ltd Shangyu Branch			13,184				13,184
Bank of Communications Co., Ltd Shaoxing Branch			6,068				6,068
China Citicbank Bank Shaoxing Shengzhong Branch			451				451
Industrial and Commercial Bank of China Co., Ltd. Dalian Zhuanghe Branch			1,524				1,524
China Guofa Bank Co., Ltd. Dalian Ganjingzi Branch			15,546				14,469
Agricultural Bank of China Nanjing Gaochun Branch			3,792				3,717
Industrial Bank Co., Ltd. Shaoxing Branch			2,248				2,248
			70,652				69,500
Total		$	124,045			$	103,829

Capital Expenditures

We incurred capital expenditures of $11.5 million and $32.1 million in the nine months ended September 30, 2024 and 2025, respectively. Our capital expenditures were used primarily to construct or upgrade our Dalian, Nanjing, Zhejiang and Auhui facilities.

We estimate that our total capital expenditures in fiscal year 2025 will reach approximately $50.0 million. Such funds have been and will continue to be used to construct new plants with new product lines and battery module packing lines.

Critical Accounting Policies

Our condensed consolidated financial information has been prepared in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (1) the reported amounts of our assets and liabilities, (2) the disclosure of our contingent assets and liabilities at the end of each fiscal period and (3) the reported amounts of revenues and expenses during each fiscal period. We continually evaluate these estimates based on our own historical experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available information and reasonable assumptions, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

There were no material changes to the critical accounting policies previously disclosed in our audited consolidated financial statements for the year ended December 31, 2024 included in the Annual Report on Form 10-K filed on March 17, 2025.

Changes in Accounting Standards

Please refer to Note 1 to our condensed consolidated financial statements, "Principal Activities, Basis of Presentation and Organization-Recently Adopted Accounting Standards" and "-Recently Issued But Not Yet Adopted Accounting Pronouncements" for a discussion of relevant pronouncements.