Financial Performance - Net revenues decreased by $37.8 million, or 47%, to $42.4 million for the three months ended March 31, 2023, from $80.2 million for the same period in 2022[270]. - Gross profit was $2.9 million, representing a decrease of $2.4 million, for the three months ended March 31, 2023, from gross profit of $5.3 million for the same period in 2022[270]. - Operating loss increased to $2.9 million for the three months ended March 31, 2023, from an operating loss of $1.3 million for the same period in 2022[270]. - Net loss was $2.2 million for the three months ended March 31, 2023, compared to a net income of $0.7 million for the same period in 2022[270]. - Fully diluted loss per share was $0.02 for the three months ended March 31, 2023, compared to fully diluted income per share of $0.01 for the same period in 2022[271]. Revenue Breakdown - Net revenues from sales of batteries for electric vehicles reached $1.8 million in Q1 2023, a significant increase from nil in Q1 2022[282]. - Net revenues from sales of batteries for light electric vehicles surged to $2.0 million in Q1 2023, up 2,111% from $88,764 in Q1 2022[283]. - Net revenues from sales of batteries for uninterruptable power supplies increased to $25.8 million in Q1 2023, representing a 73% growth from $14.9 million in Q1 2022[284]. - Net revenues from sales of materials used in manufacturing lithium batteries dropped to $12.8 million in Q1 2023, down from $65.2 million in Q1 2022, primarily due to a rapid decrease in raw material prices[285]. Cost and Expenses - Cost of revenues decreased to $39.5 million in Q1 2023, down 47% from $74.9 million in Q1 2022, aligning with the decrease in net revenues[285]. - Research and development expenses decreased by $0.9 million, or 26%, to $2.5 million for the three months ended March 31, 2023[279]. - General and administrative expenses increased by $0.2 million, or 11%, to $2.5 million for the three months ended March 31, 2023[279]. - Gross profit for Q1 2023 was $2.9 million, representing 6.9% of net revenues, compared to $5.3 million or 6.6% in Q1 2022[286]. - Operating loss totaled $2.9 million in Q1 2023, an increase of 116% from a loss of $1.3 million in Q1 2022[290]. Cash Flow and Financing - As of March 31, 2023, the company had cash and cash equivalents of $43.1 million and total current assets of $130.0 million[292]. - Net cash provided by operating activities was $9.5 million for the three months ended March 31, 2023, compared to $5.0 million in the same period in 2022, mainly due to an increase in trade and bills payable of $9.9 million[315]. - Net cash used in investing activities was $7.2 million for the three months ended March 31, 2023, compared to $2.7 million in the same period of 2022, primarily for purchases of property, plant, and equipment[319]. - Net cash provided by financing activities was $3.2 million for the three months ended March 31, 2023, compared to $1.9 million in the same period in 2022, mainly due to $13.2 million advances from bank borrowings[321]. - The company obtained a three-year term facility from Industrial and Commercial Bank of China with a maximum amount of RMB12 million (approximately $1.7 million) and borrowed RMB10 million (approximately $1.5 million) at an interest rate of 3.95% per annum[300]. Expansion and Development - The Nanjing facilities are projected to provide a total capacity of 20 GWh to support growing customer demand once fully operational[266]. - The company expects to secure more potential orders from the new energy market due to government support for new energy facilities and vehicles[267]. - The company is expanding its business by developing new products and fostering new partnerships[266]. - The company has expanded its product lines and manufacturing capacity in Dalian and Nanjing, requiring additional funding for the expansion[313]. - Capital expenditures increased from $2.7 million in Q1 2022 to $7.2 million in Q1 2023, with an estimated total of $80 million for fiscal year 2023[324]. Debt and Credit Facilities - The company borrowed a series of acceptance bills totaling RMB102.6 million (approximately $14.9 million) from China Merchants Bank, secured by cash totaling RMB102.6 million[307]. - The company repaid RMB10 million (approximately $1.5 million) on April 19, 2023, and obtained another one-year loan of RMB10 million (approximately $1.5 million) at an interest rate of 3.90% per annum[300]. - The principal amounts outstanding under credit facilities and lines of credit as of March 31, 2023, were detailed in the financial statements[322]. - Long-term credit facilities available amount to $64,284,000, with $60,678,000 borrowed[323]. - Total short-term credit facilities amount to $5,678,000, all of which have been fully borrowed[323]. Accounting and Reporting - The company has not reported any material changes to critical accounting policies since the last annual report[327]. - The financial information is prepared in accordance with U.S. GAAP, which involves significant estimates and judgments[326]. - There were no applicable quantitative and qualitative disclosures about market risk reported[329]. - The company continues to evaluate its accounting estimates based on historical experience and current conditions[326]. - No recently adopted accounting standards were specified in the provided documents[328].

Financial Data and Key Metrics Changes - Total revenues for Q1 2023 decreased by 47% to $42 million compared to the same period in 2022, primarily due to a decline in the materials business [15] - Revenues from lithium battery sales reached $29.6 million, representing a substantial increase of 97.1% year-on-year [5][15] - Gross profit margin for the battery business improved to 10.85%, an increase of 4.31 percentage points from the previous year [6][16] Business Line Data and Key Metrics Changes - Revenue from batteries used in energy storage applications was $25.82 million, reflecting a growth of 72.9% [6][15] - Revenue from batteries used in light electric vehicles (LEV) was $1.97 million, showing an impressive growth of 2117.2% [6][15] - Revenue from batteries used in electric vehicles (EV) was $1.82 million, marking a remarkable increase of 5889.8 times compared to the same period last year [6][15] Market Data and Key Metrics Changes - The combined value of pending orders across three main production facilities reached approximately $187 million as of April 30, 2023, indicating a favorable development in acquiring new customers [7] - Orders from Jinpeng Group and its affiliate amounted to RMB20.31 million since 2023, contributing to the company's ranking among the top 15 LFP lithium battery suppliers in China [8] Company Strategy and Development Direction - The company aims to continue its focus on the LEV and EV markets while consolidating its position in the energy storage field [8] - Collaboration with PowerOak is expected to enhance the company's presence in the global portable power supply market [10] - Development of sodium ion batteries is a major focus, with plans for a product launch event to highlight their environmental benefits [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism regarding market revenue prospects for 2023, particularly from lithium battery sales [7] - The company anticipates continued improvement in gross profit margins as production capacity and efficiency increase [7][14] - Management highlighted the environmental advantages of sodium ion batteries compared to lead-acid batteries, emphasizing their commitment to green development [18] Other Important Information - The Nanjing Phase 2 project is progressing, with expectations for operational readiness by the end of the year [12][19] - An Investor Day is planned, inviting shareholders to visit the production facility and learn more about ongoing projects [19] Q&A Session Summary Question: Environmental benefits of sodium ion batteries and Investor Day details - Sodium ion batteries are environmentally friendly and economically competitive, providing a safer alternative to lead-acid batteries [18] - The Nanjing Phase 2 project is on track, with facilities expected to be ready for equipment installation by June [19] Question: Future revenue composition from battery business - Energy storage currently accounts for over 80% of total revenue, but significant growth is expected in LEV and EV segments due to increased production capacity [21]

PART I [Business](index=10&type=section&id=Item%201.%20Business) CBAK Energy Technology manufactures high-power lithium batteries and materials, expanding capacity and developing new products for diverse applications Financial Performance Overview (2021 vs 2022) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Revenues** | $248.7 million | $52.7 million | | **Net (Loss)/Profit** | ($10.5 million) | $61.6 million | | **Accumulated Deficit** | ($131.7 million) | - | | **Net Assets** | $125.2 million | - | - The company reports its financial and operational information in two segments: (i) production of high-power lithium battery cells, and (ii) manufacture and sale of materials used in high-power lithium battery cells[38](index=38&type=chunk) - In November 2021, the company acquired a controlling interest in Hitrans, a developer and manufacturer of NCM precursor and cathode materials, thereby entering the battery materials business[37](index=37&type=chunk)[53](index=53&type=chunk) - The company is expanding its manufacturing capacity in Nanjing with a project expected to have a total production capacity of **20 GWh** per year. Phase I (**2 GWh**) is operational, and Phase II construction has begun[49](index=49&type=chunk) - Key product developments include the model **32140** large-sized cylindrical "tabless" battery and a special **26650** lithium battery designed for ultra-low temperature applications[51](index=51&type=chunk)[52](index=52&type=chunk) Revenue by Customer Location (Fiscal Years 2021-2022) | Region | 2022 Amount (in thousands) | 2022 % of Net Revenues | 2021 Amount (in thousands) | 2021 % of Net Revenues | | :--- | :--- | :--- | :--- | :--- | | Mainland China | $198,115 | 79% | $43,746 | 83% | | Europe | $50,378 | 20% | $8,503 | 16% | | USA | $37 | 0% | $0.4 | 0% | | Others | $196 | 1% | $420 | 1% | | **Total** | **$248,725** | **100%** | **$52,670** | **100%** | [Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including going concern uncertainty, potential U.S. delisting, PRC regulatory changes, internal control weaknesses, and customer concentration - The company's auditor has expressed **substantial doubt** about its ability to continue as a **going concern** due to recurring net losses and significant short-term debt obligations[29](index=29&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk) - The company was listed as a Commission-Identified Issuer under the **HFCAA** in May 2022. While the PCAOB regained inspection access in late 2022, future inability to inspect could lead to trading prohibitions on U.S. exchanges if it occurs for **two consecutive years**[115](index=115&type=chunk)[116](index=116&type=chunk) - New PRC regulations, including the **Trial Measures** effective **March 31, 2023**, have strengthened oversight on overseas offerings by China-based issuers, which could create compliance challenges and impact future capital raising[122](index=122&type=chunk)[125](index=125&type=chunk)[127](index=127&type=chunk) - The company has identified **material weaknesses** in its internal control over financial reporting, including a lack of appropriate policies for accounting and disclosure evaluation and insufficient accounting personnel with **U.S. GAAP** expertise[33](index=33&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk) - A limited number of customers account for a significant portion of revenue, with the top five customers representing **69.5%** of revenues in 2022[185](index=185&type=chunk) [Unresolved Staff Comments](index=41&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that there are no unresolved staff comments - Not applicable[249](index=249&type=chunk) [Properties](index=41&type=section&id=Item%202.%20Properties) The company owns and rents manufacturing, R&D, and office facilities across Dalian, Nanjing, and Zhejiang, totaling over 130,000 square meters Facility Breakdown by Use (as of Dec 31, 2022) | Usage | Area (m²) | | :--- | :--- | | **Constructions Completed (Owned)** | | | Manufacturing | 72,959 | | R&D and administrative | 6,812 | | Warehousing | 18,749 | | Other facilities | 4,317 | | **Total Owned** | **102,837** | | **Constructions Completed (Rented)** | | | Manufacturing | 16,476 | | Warehousing | 9,097 | | Administrative | 1,723 | | **Total Rented** | **27,296** | - The company has completed construction of **Phase One** of its Nanjing site, which occupies an area of **27,173 square meters**[249](index=249&type=chunk) [Legal Proceedings](index=41&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in legal proceedings, with details provided in Note 27 (ii) of the consolidated financial statements - The company refers to **Note 27 (ii)** of its audited consolidated financial statements for details on legal proceedings[254](index=254&type=chunk) [Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[254](index=254&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=42&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "CBAT", has never paid dividends, and made no stock repurchases in fiscal year 2022 - The company's common stock trades on the Nasdaq Capital Market under the symbol "**CBAT**"[255](index=255&type=chunk) - The company has **never declared or paid dividends** and has no current plans to do so, intending to retain earnings for business expansion[256](index=256&type=chunk) - **No repurchases** of common stock were made during the fiscal year 2022[259](index=259&type=chunk) [Reserved](index=42&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion And Analysis Of Financial Condition And Results Of Operations](index=43&type=section&id=Item%207.%20Management's%20Discussion%20And%20Analysis%20Of%20Financial%20Condition%20And%20Results%20Of%20Operations) Revenue significantly increased to $248.7 million in FY2022 due to the Hitrans acquisition and UPS battery sales, yet the company reported an $11.3 million net loss, influenced by prior year warrant gains and ongoing going concern issues Key Financial Results (2021 vs 2022) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | **Net Revenues** | $248.7 million | $52.7 million | | **Net (Loss)/Profit** | ($11.3 million) | $61.5 million | | **Gross Profit** | $18.1 million | $5.1 million | | **Gross Margin** | 7.3% | 9.7% | - The substantial increase in revenue was primarily driven by the inclusion of a full year of revenue from the Hitrans materials segment (**$154.0 million**) and a **151%** increase in sales of batteries for uninterruptible power supplies (to **$83.6 million**)[263](index=263&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk) - The shift from a net profit in 2021 to a net loss in 2022 was heavily influenced by a **$61.8 million** non-cash gain from the change in fair value of warrants liability recorded in 2021, compared to a smaller **$5.7 million** gain in 2022[275](index=275&type=chunk)[291](index=291&type=chunk) - As of December 31, 2022, the company had a working capital surplus of **$13.8 million**, with total current assets of **$125.7 million** and total current liabilities of **$111.9 million**[292](index=292&type=chunk) [Quantitative And Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20And%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable, but the company notes foreign currency translation risk due to PRC subsidiaries' RMB-denominated financial records - The company states that quantitative and qualitative disclosures about market risk are not applicable[360](index=360&type=chunk) - The company's financial records for its PRC subsidiaries are maintained in **RMB**, which is their functional currency. These are translated into U.S. dollars for reporting purposes, exposing the company to **foreign currency translation risk**[358](index=358&type=chunk) [Financial Statements And Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20And%20Supplementary%20Data) This section presents the audited consolidated financial statements for 2021 and 2022, including the auditor's report which expresses a "Going Concern" uncertainty - The Report of Independent Registered Public Accounting Firm includes an explanatory paragraph expressing **substantial doubt** about the company's ability to continue as a **going concern**, citing accumulated deficits from recurring net losses and significant short-term debt obligations[366](index=366&type=chunk)[372](index=372&type=chunk) Consolidated Balance Sheet Highlights (As of Dec 31) | Metric (in millions) | 2022 | 2021 | | :--- | :--- | :--- | | **Total Assets** | $244.0 | $262.6 | | Cash and cash equivalents | $6.5 | $7.4 | | Total Current Assets | $125.7 | $122.8 | | **Total Liabilities** | $119.7 | $121.7 | | Total Current Liabilities | $111.9 | $112.8 | | **Total Equity** | $124.4 | $140.9 | Consolidated Statement of Operations Highlights (Year Ended Dec 31) | Metric (in millions) | 2022 | 2021 | | :--- | :--- | :--- | | **Net Revenues** | $248.7 | $52.7 | | **Gross Profit** | $18.1 | $5.1 | | **Operating Loss** | ($11.5) | ($11.7) | | **Net (Loss)/Income** | ($11.3) | $61.6 | | **Basic (Loss)/EPS** | ($0.11) | $0.70 | Consolidated Statement of Cash Flows Highlights (Year Ended Dec 31) | Metric (in millions) | 2022 | 2021 | | :--- | :--- | :--- | | Net cash from operating activities | $15.1 | ($4.3) | | Net cash used in investing activities | ($7.9) | ($38.1) | | Net cash from financing activities | $5.6 | $48.3 | [Changes In And Disagreements With Accountants On Accounting And Financial Disclosure](index=120&type=section&id=Item%209.%20Changes%20In%20And%20Disagreements%20With%20Accountants%20On%20Accounting%20And%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[725](index=725&type=chunk) [Controls And Procedures](index=120&type=section&id=Item%209A.%20Controls%20And%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of December 31, 2022, due to material weaknesses in internal controls, with remediation efforts underway - Management concluded that disclosure controls and procedures were **ineffective** as of December 31, 2022[727](index=727&type=chunk) - **Material weaknesses** identified include: (1) lack of appropriate policies and procedures to evaluate proper accounting and disclosures, and (2) insufficient accounting personnel with the necessary technical knowledge of **U.S. GAAP**[731](index=731&type=chunk) - Remediation measures include hiring a permanent CFO and providing regular training to financial personnel on internal controls and **U.S. GAAP**[731](index=731&type=chunk)[732](index=732&type=chunk) [Other Information](index=121&type=section&id=Item%209B.%20Other%20Information) No Form 8-K required disclosures from Q4 2022 were unreported - No information was required to be disclosed on a **Form 8-K** during **Q4 2022** that was not already reported[735](index=735&type=chunk) [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=121&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This section is not applicable to the company - Not applicable[735](index=735&type=chunk) PART III [Directors, Executive Officers And Corporate Governance](index=122&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20And%20Corporate%20Governance) The company's governance structure includes a five-member board with three independent directors, key executives, and three independent board committees, adhering to ethical codes and reporting requirements Directors and Executive Officers | Name | Position | | :--- | :--- | | Yunfei Li | Chairman of the Board and Chief Executive Officer | | J. Simon Xue | Director | | Martha C. Agee | Director | | Jianjun He | Director | | Xiangyu Pei | Director and Interim Chief Financial Officer | - The Board of Directors is comprised of **five members**, with **three directors** (J. Simon Xue, Martha C. Agee, and Jianjun He) qualifying as "independent" under NASDAQ rules[756](index=756&type=chunk) - The board has **three standing committees**: Audit, Compensation, and Nominating and Corporate Governance, each composed entirely of independent directors[757](index=757&type=chunk) - Martha C. Agee is designated as the **Audit Committee financial expert**[756](index=756&type=chunk)[758](index=758&type=chunk) [Executive Compensation](index=127&type=section&id=Item%2011.%20Executive%20Compensation) This section details executive compensation for 2021-2022, including salaries, stock awards, employment agreement terms, and non-employee director compensation Summary Compensation Table (2021-2022) | Name and Principal Position | Year | Salary ($) | Stock Awards ($) | Option Awards ($) | Total ($) | | :--- | :--- | :--- | :--- | :--- | :--- | | Yunfei Li, CEO | 2022 | 117,658 | 60,000 | - | 177,658 | | | 2021 | 120,107 | 120,001 | 53,450 | 293,557 | | Xiangyu Pei, Interim CFO | 2022 | 88,556 | 27,000 | - | 115,556 | | | 2021 | 74,979 | 54,000 | 40,087 | 169,066 | - Employment agreements with named executive officers have initial **three-year terms** and include customary non-competition, confidentiality, and non-disclosure covenants[768](index=768&type=chunk)[770](index=770&type=chunk) - Non-employee directors received fees of **$20,000 in cash** and **$3,000 in stock awards** for their service in 2022[776](index=776&type=chunk) [Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters](index=130&type=section&id=Item%2012.%20Security%20Ownership%20Of%20Certain%20Beneficial%20Owners%20And%20Management%20And%20Related%20Stockholder%20Matters) This section details beneficial ownership as of April 10, 2023, with CEO Yunfei Li holding 12.38% and all officers/directors collectively owning 12.82% of common stock Beneficial Ownership as of April 10, 2023 | Name | Amount and Nature of Beneficial Ownership | Percent of Ownership | | :--- | :--- | :--- | | Yunfei Li (CEO) | 11,025,871 | 12.38% | | Daiwei Li (Principal Stockholder) | 6,733,359 | 7.57% | | All executive officers and directors as a group (5 persons) | 11,423,854 | 12.82% | - As of December 31, 2022, there were **4,854,518 securities** remaining available for future issuance under the company's **2015 Equity Incentive Plan**[797](index=797&type=chunk) [Certain Relationships And Related Transactions, And Director Independence](index=133&type=section&id=Item%2013.%20Certain%20Relationships%20And%20Related%20Transactions%2C%20And%20Director%20Independence) The company discloses significant related party transactions, including substantial purchases and sales with entities linked to its former CEO, and notes personal guarantees by CEO Yunfei Li for bank facilities Significant Related Party Transactions (2022) | Transaction | Related Party | Amount (USD) | | :--- | :--- | :--- | | Purchase of batteries | Zhengzhou BAK Battery Co., Ltd | $26,819,454 | | Sales of cathode raw materials | Zhengzhou BAK Battery Co., Ltd | $53,236,804 | | Sales of cathode raw materials | Shenzhen BAK Power Battery Co., Ltd | $8,681,496 | - As of December 31, 2022, the company had a trade receivable balance of **$9.2 million** from Zhengzhou BAK Battery Co., Ltd. and **$5.5 million** from Shenzhen BAK Power Battery Co., Ltd[809](index=809&type=chunk)[813](index=813&type=chunk) - CEO Yunfei Li and his wife have provided **personal guarantees** for multiple bank facilities obtained by the company in 2022 and 2023[816](index=816&type=chunk)[817](index=817&type=chunk)[818](index=818&type=chunk)[819](index=819&type=chunk) [Principal Accounting Fees And Services](index=136&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20And%20Services) This section details fees billed by Centurion ZD CPA & Co. for 2021-2022, with all services pre-approved by the Audit Committee Accountant Fees (2021-2022) | Fee Category | 2022 | 2021 | | :--- | :--- | :--- | | Audit Fees | $513,721 | $265,000 | | Audit-Related Fees | $2,500 | $67,500 | | Tax Fees | $0 | $0 | | All Other Fees | $0 | $0 | - All services provided by the principal accountants were **pre-approved** by the Audit Committee[827](index=827&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=137&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits, with financial statements under Item 8 and schedules omitted due to inclusion elsewhere or irrelevance - The financial statements are located under **Item 8** of the report[829](index=829&type=chunk) - Financial statement schedules have been omitted because the required information is included in the consolidated financial statements or notes, or is not applicable[829](index=829&type=chunk)[830](index=830&type=chunk) [Form 10-K Summary](index=139&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates no Form 10-K summary is provided - None[833](index=833&type=chunk)

Financial Data and Key Metrics Changes - The company's revenue increased by 3.7 times from $52.67 million in 2021 to $249 million in 2022 [4][5] - In Q4 2022, net revenues surged by 95.9% to $54.4 million compared to the same period in 2021 [17] - Gross profit for 2022 was $18.1 million, representing an increase of 254.1% from 2021 [20] Business Line Data and Key Metrics Changes - The battery segment's annual revenue reached approximately $94.72 million in 2022, a 1.76 times increase year-on-year [5] - The company has a backlog of orders totaling approximately $180 million as of March 31, 2023, which supports future revenue growth [6] - The energy storage market saw increased sales due to growing demand for renewable energy sources [19] Market Data and Key Metrics Changes - The company signed a framework agreement with Jinpeng Group, resulting in orders worth approximately $7 million [8] - Cooperation with Daihatsu Motor led to battery product supplies worth about RMB2.7 million in 2022 [9] - The demand for sodium-ion batteries is expected to create a market size of at least hundreds of billions of RMB in the near future [14] Company Strategy and Development Direction - The company is actively expanding production capacity to meet high demand, with plans to achieve a production capacity of 20 gigawatt hours in Nanjing [12] - Focus on sodium-ion battery development, with expected mass production by the end of the year [13] - The company aims to maintain a leading position in the industry through continuous R&D investment [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023 due to declining raw material prices and strong order backlog [15][26] - The company anticipates that the production capacity expansion will better meet customer demands in the second half of the year [32] - Management highlighted the importance of sodium batteries in the future market, especially given their stable pricing and performance advantages [29] Other Important Information - The company recorded a net loss attributable to shareholders of $10.7 million for Q4 2022, compared to a net income of $9.16 million in the same period of 2021 [22] - Operating expenses rose due to increased R&D investments, but the company managed to reduce sales and marketing expenses [21] Q&A Session Summary Question: Can you provide details on the losses in profit and the ability to control production costs in 2023? - Management noted that the decline in gross margin was due to lithium carbonate price fluctuations and increased R&D investments, but they expect profitability to improve with optimized production processes and declining raw material prices [25][26] Question: What are the application scenarios and market size for sodium batteries? - Management highlighted that sodium batteries have stable pricing and superior low-temperature performance, predicting a significant market size for sodium batteries in the future [28][29] Question: Will EV and LEV sectors continue to grow rapidly, especially after sodium battery production? - Management confirmed that EV and LEV sales are expected to grow as production capacity increases and certification processes are completed [32] Question: Any updates on the development of larger cylindrical batteries? - Management reported progress in the development of large cylindrical batteries, with prototypes completed and plans for mass production [34][35] Question: Will there be serious liquidity issues if revenue costs do not decrease? - Management reassured that cash flow from existing business is sufficient and that they have financial support from local government and banks [39]

Financial Data and Key Metrics Changes - In Q3 2022, the company's revenues surged by over 500% to approximately $57.7 million compared to the same period in 2021, primarily driven by increased sales in battery products and materials [14] - The net revenues from the battery business grew by about 170% year-over-year [14] - Gross profit reached $3.5 million, representing a 206% increase from the prior year, but the gross margin decreased to 6% from 12% due to rising raw material costs [14] Business Line Data and Key Metrics Changes - Revenues from the battery business in Q3 were approximately $25.8 million, up by roughly 170% [6] - The energy storage segment continues to be a significant revenue source, but the company is actively developing its EV and LEV markets [7][9] - Orders from the EV and LEV markets amounted to about $4.3 million as of September 30, with expectations for continued growth [9] Market Data and Key Metrics Changes - The company has received orders worth approximately $100 million across its three major manufacturing centers, indicating strong market demand [7] - A significant order of approximately $29.3 million was secured from a leading European provider, showcasing the company's growing presence in the European market [8] - The Indian market is being targeted through a partnership with Welson Power, with initial orders worth about 380,000 Chinese [10] Company Strategy and Development Direction - The company is focusing on expanding its market share in the EV, LEV, and energy storage sectors while also investing in larger cylindrical batteries and sodium-ion battery development [11][12] - A strategic partnership with JinPeng Group aims to enhance the company's position in the EV market [7] - The company plans to ramp up marketing efforts and continue capacity expansion to meet increasing demand [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in future profit growth as raw material prices are expected to decrease with increased production capacity from suppliers [13][14] - The company anticipates that the profitability will improve as it adjusts product prices to offset raw material cost increases [27] - Management highlighted the potential of sodium-ion batteries and their strategic plan to develop this product line alongside lithium-ion batteries [25] Other Important Information - The company recorded a net loss attributable to shareholders of $290,000 in Q3, a significant decrease from a net income of $12 million in the same period last year [14][16] - Operating expenses rose by 14.8% to $4.9 million, with R&D expenses increasing by 31% [15] Q&A Session Summary Question: Reason for not disclosing the name of a major European client - Management stated that confidentiality is crucial to maintain competitive advantage and confirmed plans for expanding cooperation with the client in the future [18][19] Question: Future revenue composition and growth of EV and LEV segments - Management indicated that while energy storage remains a major revenue source, they expect significant growth in orders from EV and LEV manufacturers, leading to an increase in their revenue proportion [20][21][22] Question: Strategic plan for sodium-ion batteries - Management explained that sodium-ion batteries will complement lithium-ion products, focusing on their advantages in low-temperature conditions and cost-effectiveness [23][25] Question: Impact of raw material prices on profitability - Management acknowledged the ongoing impact of high raw material prices but expressed optimism for improved profitability next year as prices stabilize and sales prices increase [26][27]

[PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This section presents the company's financial statements, management's analysis, market risk disclosures, and internal controls for the reporting period [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The financial statements show revenue growth, a net income decline due to warrant fair value, and a going concern risk [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show increased assets and liabilities, driven by inventories and payables, with a slight equity decrease Condensed Consolidated Balance Sheet Highlights (in thousands USD) | Account | Dec 31, 2021 | June 30, 2022 | Change | | :--- | :--- | :--- | :--- | | **Assets** | | | | | Cash and cash equivalents | $7,358 | $4,381 | ($2,977) | | Trade accounts and bills receivable, net | $49,907 | $26,057 | ($23,850) | | Inventories | $30,133 | $55,306 | $25,173 | | Total current assets | $122,842 | $137,278 | $14,436 | | Total assets | $262,618 | $269,982 | $7,364 | | **Liabilities & Equity** | | | | | Trade accounts and bills payable | $65,376 | $80,511 | $15,135 | | Short-term bank borrowings | $8,812 | $16,875 | $8,063 | | Total current liabilities | $112,767 | $125,723 | $12,956 | | Total liabilities | $121,733 | $134,049 | $12,316 | | Total equity | $140,885 | $135,933 | ($4,952) | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) Operations statements show substantial revenue growth, but net income significantly declined due to warrant fair value Three Months Ended June 30, Performance (in thousands USD) | Metric | 2021 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenues | $5,889 | $56,350 | +857% | | Gross Profit | $1,098 | $5,535 | +404% | | Operating (Loss) Income | ($2,724) | $144 | +105% | | Net Income Attributable to CBAK | $2,701 | $805 | -70% | | Diluted EPS | $0.02 | $0.00* | -100% | Six Months Ended June 30, Performance (in thousands USD) | Metric | 2021 | 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenues | $15,305 | $136,546 | +792% | | Gross Profit | $2,937 | $10,852 | +269% | | Operating Loss | ($2,751) | ($1,191) | +57% | | Net Income Attributable to CBAK | $32,310 | $1,250 | -96% | | Diluted EPS | $0.37 | $0.01 | -97% | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash flow statements indicate positive operating cash flow, decreased investing, and a significant drop in financing Cash Flow Summary for Six Months Ended June 30 (in thousands USD) | Cash Flow Activity | 2021 | 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($2,424) | $17,339 | | Net cash used in investing activities | ($17,682) | ($6,338) | | Net cash provided by financing activities | $51,200 | $4,945 | | **Net increase in cash** | **$31,698** | **$15,144** | [Notes to the Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail the company's battery business, Hitrans acquisition, going concern risk, and segment revenue breakdown - The company is principally engaged in the manufacture, commercialization, and distribution of high power lithium-ion rechargeable batteries for applications such as light electric vehicles, electric cars, and uninterruptible power supplies[22](index=22&type=chunk) - The company's accumulated deficit and significant short-term debt obligations raise substantial doubt about its ability to continue as a going concern. Management's plans include improving profitability and obtaining additional financing[60](index=60&type=chunk) - Following the acquisition of Hitrans in November 2021, the company now operates in two segments: CBAT (battery manufacturing) and Hitrans (development and manufacturing of NCM precursor and cathode materials)[242](index=242&type=chunk) Revenue by Segment - Six Months Ended June 30, 2022 (in thousands USD) | Segment | Net Revenues | | :--- | :--- | | CBAT | $40,736 | | Hitrans | $95,810 | | **Total** | **$136,546** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue growth from acquisition, declining gross margins, working capital, and ongoing going concern risks [Results of Operations](index=51&type=section&id=Results%20of%20Operations) Operations results show a significant revenue surge, a decline in gross margin, and increased operating expenses - Net revenues for Q2 2022 increased by **$50.5 million (857%)** year-over-year, driven by the new Hitrans segment (**$30.6 million**) and a **331%** increase in sales of batteries for uninterruptible power supplies[274](index=274&type=chunk)[278](index=278&type=chunk)[279](index=279&type=chunk) - Gross profit margin for Q2 2022 decreased to **9.8%** from **18.6%** in Q2 2021, mainly due to the increase in raw material prices and the inclusion of lower-margin sales from the Hitrans subsidiary[280](index=280&type=chunk) - Research and development expenses for Q2 2022 increased by **120%** to **$2.3 million**, primarily due to higher salary expenses from incorporating Hitrans' R&D personnel and a growing team at Nanjing CBAK[281](index=281&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity analysis reveals cash and working capital, going concern risk, credit facilities, and capital expenditures - As of June 30, 2022, the company had cash and cash equivalents of **$41.5 million** and a net working capital of **$11.6 million**[303](index=303&type=chunk) - Management acknowledges that the company's accumulated deficit (**$121.2 million**) and short-term debt obligations raise substantial doubt about its ability to continue as a going concern[304](index=304&type=chunk) Credit Facilities Summary (in thousands USD) | Facility Type | Amount Available | Amount Borrowed | | :--- | :--- | :--- | | Long-term credit facilities | $19,806 | $13,293 | | Short-term credit facilities | $4,479 | $4,479 | | Other lines of credit | $39,137 | $39,137 | | **Total** | **$63,422** | **$56,909** | - Estimated capital expenditures for fiscal year 2022 are approximately **$10.0 million**, intended for renovating product lines and constructing new plants[334](index=334&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that quantitative and qualitative disclosures about market risk are not applicable for this period - The company states that Quantitative and Qualitative Disclosures About Market Risk are not applicable[337](index=337&type=chunk) [Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective due to material weaknesses, with remediation efforts underway - Management concluded that the company's disclosure controls and procedures were ineffective as of June 30, 2022[340](index=340&type=chunk) - Material weaknesses identified include: - Lack of appropriate policies and procedures for evaluating the proper accounting and disclosures of key documents - Insufficient skilled accounting personnel with adequate U.S. GAAP knowledge and experience[340](index=340&type=chunk)[341](index=341&type=chunk) - Remediation measures include hiring a permanent CFO and providing regular training to financial personnel on U.S. GAAP and internal controls[341](index=341&type=chunk)[342](index=342&type=chunk) [PART II OTHER INFORMATION](index=63&type=section&id=PART%20II%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, and other miscellaneous disclosures for the reporting period [Legal Proceedings](index=63&type=section&id=Item%201.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference from Note 26 of the financial statements - Details on legal proceedings are provided in Note 26, "Commitments and Contingencies—(ii) Litigation," within the financial statements section of this report[347](index=347&type=chunk) [Risk Factors](index=63&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - The company reports no material changes from the risk factors previously disclosed in its 2021 Annual Report on Form 10-K[348](index=348&type=chunk) [Other Items](index=63&type=section&id=Other%20Items) The company reported no unregistered sales, no defaults, no other material information, and mine safety is not applicable - Item 2: No unregistered sales of equity securities were reported[349](index=349&type=chunk) - Item 3: No defaults upon senior securities occurred[349](index=349&type=chunk) - Item 4: Mine safety disclosures are not applicable[349](index=349&type=chunk) - Item 5: No other information to report[349](index=349&type=chunk)

CBAK Energy Technology, Inc. (NASDAQ:CBAT) Q2 2022 Earnings Conference Call August 15, 2022 8:00 AM ET Company Participants Thierry Li - Investor Relations, Director Yunfei Li - Chairman, President and Chief Executive Officer Xiangyu Pei - Interim Chief Financial Officer Conference Call Participants Laura Liu - Stone Street Group Operator Good day, ladies and gentlemen, thank you for standing by, and welcome to CBAK Energy Technology’s Second Quarter and First Half 2022 Earnings Conference Call. Currently, ...

PART I FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements.) This section presents unaudited condensed consolidated financial statements for Q1 2021 and 2022, with detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement presents the company's financial position, including assets, liabilities, and equity, at specific dates Condensed Consolidated Balance Sheets (as of Dec 31, 2021 and Mar 31, 2022) | Metric | Dec 31, 2021 (US$) | Mar 31, 2022 (US$) | | :----------------------------- | :----------------- | :----------------- | | Total Assets | 262,617,997 | 278,795,221 | | Total Liabilities | 121,733,424 | 136,763,173 | | Total Equity | 140,884,573 | 142,032,048 | | Current Assets | 122,841,687 | 139,976,970 | | Current Liabilities | 112,767,476 | 126,793,973 | | Cash and cash equivalents | 7,357,875 | 5,608,465 | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)) This statement details the company's revenues, expenses, and net income or loss over the reporting periods Condensed Consolidated Statements of Operations (Three Months Ended March 31) | Metric | 2021 (US$) | 2022 (US$) | Change (US$) | Change (%) | | :-------------------------------------------------- | :--------- | :--------- | :----------- | :--------- | | Net revenues | 9,416,049 | 80,196,298 | 70,780,249 | 752% | | Gross profit | 1,839,429 | 5,316,354 | 3,476,925 | 189% | | Operating loss | (27,882) | (1,335,261) | (1,307,379) | 4689% | | Net income | 29,608,168 | 680,503 | (28,927,665) | -98% | | Net income attributable to shareholders | 29,609,282 | 444,453 | (29,164,829) | -98% | | Basic Income per share | 0.35 | 0.01 | (0.34) | -97% | | Diluted Income per share | 0.35 | 0.01 | (0.34) | -97% | - The significant decrease in net income for Q1 2022 compared to Q1 2021 was largely due to a substantial reduction in the gain from changes in the fair value of warrants liability, which dropped from **$28.43 million** in Q1 2021 to **$1.63 million** in Q1 2022[13](index=13&type=chunk) [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) This statement outlines changes in the company's equity components, including capital and accumulated deficit Condensed Consolidated Statements of Changes in Shareholders' Equity (as of March 31) | Metric | 2021 (US$) | 2022 (US$) | | :----------------------------------- | :--------- | :--------- | | Total Shareholders' Equity | 97,882,963 | 142,032,048 | | Accumulated Deficit | (154,375,029) | (122,053,806) | | Additional Paid-in Capital | 241,048,002 | 241,981,141 | | Non-controlling interests | 1,718 | 7,870,073 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31) | Metric | 2021 (US$) | 2022 (US$) | | :------------------------------------------------------- | :--------- | :--------- | | Net cash provided by operating activities | 763,859 | 5,051,103 | | Net cash used in investing activities | (5,681,131) | (2,717,822) | | Net cash provided by financing activities | 65,349,690 | 1,898,756 | | Net increase in cash and cash equivalents and restricted cash | 60,768,702 | 4,395,938 | | Cash and cash equivalents and restricted cash at end of period | 81,440,200 | 30,750,562 | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Principal Activities, Basis of Presentation and Organization](index=11&type=section&id=1.%20Principal%20Activities%2C%20Basis%20of%20Presentation%20and%20Organization) This note details core business, Hitrans acquisition, COVID-19 impact, going concern, and accounting policies - The company's core business is the manufacture, commercialization, and distribution of high-power lithium-ion rechargeable batteries for various applications[21](index=21&type=chunk) - CBAK Energy Technology, Inc. acquired **81.56%** of Hitrans in November **2021**, expanding into the NCM precursor and cathode materials business[45](index=45&type=chunk)[55](index=55&type=chunk) - The COVID-19 pandemic caused operational disruptions in **2021**, including facility suspensions, and is expected to continue to materially adversely impact product demand[58](index=58&type=chunk) - The company's accumulated deficit and significant short-term debt raise substantial doubt about its ability to continue as a going concern, with plans to improve profitability and secure additional financing[59](index=59&type=chunk) - The company adopted ASU **2021-04** (Issuer's Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options) from January **1**, **2022**, with no material impact on financial statements[62](index=62&type=chunk) [Note 2. Pledged deposits](index=20&type=section&id=2.%20Pledged%20deposits) Pledged deposits increased to **$25.14 million** by March 31, 2022, primarily to secure bills payable Pledged Deposits (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :----------------------- | :----------- | :----------- | | Pledged deposits with banks for bills payable | 18,996,749 | 25,141,517 | | Others | - | 580 | | **Total** | **18,996,749** | **25,142,097** | [Note 3. Trade and Bills Receivable, net](index=20&type=section&id=3.%20Trade%20and%20Bills%20Receivable%2C%20net) Trade and bills receivable, net, increased to **$50.27 million** by March 31, 2022, with higher bills receivable Trade and Bills Receivable, net (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :----------------------------- | :----------- | :----------- | | Trade accounts receivable | 48,707,457 | 46,364,398 | | Less: Allowance for doubtful accounts | (4,618,269) | (4,904,450) | | Bills receivable | 5,817,941 | 8,805,836 | | **Total** | **49,907,129** | **50,265,784** | - The allowance for doubtful accounts increased from **$4.62 million** at December **31**, **2021**, to **$4.90 million** at March **31**, **2022**, with a provision of **$322,928** for the period[74](index=74&type=chunk) [Note 4. Inventories](index=21&type=section&id=4.%20Inventories) Inventories significantly increased to **$41.87 million** by March 31, 2022, across all categories Inventories (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :--------------- | :----------- | :----------- | | Raw materials | 11,323,638 | 15,484,667 | | Work in progress | 8,093,002 | 9,428,354 | | Finished goods | 10,716,700 | 16,958,128 | | **Total** | **30,133,340** | **41,871,149** | - Write-downs of obsolete inventories increased from **$233,305** for the three months ended March **31**, **2021**, to **$406,152** for the same period in **2022**[77](index=77&type=chunk) [Note 5. Prepayments and Other Receivables](index=21&type=section&id=5.%20Prepayments%20and%20Other%20Receivables) Prepayments and other receivables increased to **$14.52 million** by March 31, 2022, due to VAT and supplier prepayments Prepayments and Other Receivables (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :-------------------------- | :----------- | :----------- | | Value added tax recoverable | 7,144,712 | 8,332,545 | | Prepayments to suppliers | 4,663,431 | 5,060,156 | | Prepaid operating expenses | 683,648 | 758,411 | | **Total (net)** | **12,746,990** | **14,516,068** | [Note 6. Property, Plant and Equipment, net](index=21&type=section&id=6.%20Property%2C%20Plant%20and%20Equipment%2C%20net) Net property, plant, and equipment decreased to **$88.53 million** by March 31, 2022, due to depreciation Property, Plant and Equipment, net (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :-------------------------- | :----------- | :----------- | | Carrying amount | 90,042,773 | 88,532,811 | | Accumulated depreciation | (15,312,245) | (17,620,341) | | Depreciation expense (3 months ended Mar 31) | 698,618 (2021) | 2,271,267 (2022) | - The company believes there was no impairment of property, plant, and equipment during the three months ended March **31**, **2021** and **2022**[82](index=82&type=chunk) [Note 7. Construction in Progress](index=22&type=section&id=7.%20Construction%20in%20Progress) Construction in progress increased to **$28.41 million** by March 31, 2022, for facilities and production lines Construction in Progress (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :------------------------------------------------ | :----------- | :----------- | | Construction in progress | 21,619,522 | 22,277,466 | | Prepayment for acquisition of property, plant and equipment | 5,723,570 | 6,132,827 | | **Carrying amount** | **27,343,092** | **28,410,293** | - Capitalized interest for construction in progress was **$213,583** for the three months ended March **31**, **2021**, but nil for the same period in **2022**[85](index=85&type=chunk) [Note 8. Non-marketable equity securities](index=22&type=section&id=8.%20Non-marketable%20equity%20securities) Non-marketable equity securities were valued at **$714,504** as of March 31, 2022, with no impairment Non-marketable Equity Securities (US$) | Category | Mar 31, 2022 | | :--------------- | :----------- | | Cost | 1,419,312 | | Impairment | (704,808) | | **Carrying amount** | **714,504** | - CBAK Power acquired **9.74%** of the equity interests of Hunan DJY Technology Co., Ltd. for **$1.40 million** in April **2021**[86](index=86&type=chunk) - No impairment loss was recognized for non-marketable equity securities for the three months ended March **31**, **2022**[87](index=87&type=chunk) [Note 9. Lease](index=23&type=section&id=9.%20Lease) This note details prepaid land use rights, sales-type leases, and operating leases, with increased expenses Prepaid Land Use Rights (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :-------------------------- | :----------- | :----------- | | Balance | 13,797,230 | 13,737,871 | | Amortization charge (3 months ended Mar 31) | (89,718) | | Foreign exchange adjustment | 30,359 | Net Investment in Sales-Type Leases (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :------------------------------------------ | :----------- | :----------- | | Total future minimum lease payments receivable | 1,737,817 | 1,587,106 | | Non-current portion | 838,528 | 714,933 | | Interest income (3 months ended Mar 31) | 26,637 (2021) | 29,069 (2022) | - Operating lease cost increased significantly from **$11,321** for the three months ended March **31**, **2021**, to **$212,691** for the same period in **2022**[98](index=98&type=chunk) [Note 10. Intangible Assets, net](index=27&type=section&id=10.%20Intangible%20Assets%2C%20net) Intangible assets decreased to **$1.83 million** by March 31, 2022, due to amortization of a sewage permit Intangible Assets, net (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :-------------------- | :----------- | :----------- | | Carrying amount | 1,961,739 | 1,834,351 | | Accumulated amortization | (62,561) | (194,420) | | Amortization expenses (3 months ended Mar 31) | 686 (2021) | 131,571 (2022) | - The company obtained a five-year sewage discharge permit for its Zhejiang manufacturing facilities on January **27**, **2022**[105](index=105&type=chunk) [Note 11. Acquisition of subsidiaries](index=27&type=section&id=11.%20Acquisition%20of%20subsidiaries) CBAK Power acquired **81.56%** of Hitrans for **$24.95 million**, recognizing **$1.61 million** in goodwill - CBAK Power acquired **81.56%** of registered equity interests (representing **75.57%** of paid-up capital) of Zhejiang Hitrans Lithium Battery Technology Co., Ltd. (Hitrans)[108](index=108&type=chunk) - The acquisition was completed on November **26**, **2021**, with a total purchase consideration of **$24.95 million**[113](index=113&type=chunk)[118](index=118&type=chunk) - The transaction resulted in the recognition of **$1.61 million** in goodwill, attributed to the strategic value and expected synergies from combining operations[118](index=118&type=chunk) - After the completion of the acquisition, Hitrans became a wholly-owned subsidiary of the Company[116](index=116&type=chunk) [Note 12. Goodwill](index=30&type=section&id=12.%20Goodwill) Goodwill increased slightly to **$1.65 million** by March 31, 2022, with no impairment recognized Goodwill (US$) | Category | Jan 1, 2022 | Mar 31, 2022 | | :---------------------- | :---------- | :----------- | | Balance | 1,645,232 | 1,650,629 | | Foreign exchange adjustment | 5,397 | | **Balance at end of period** | | **1,650,629** | - No impairment loss of Goodwill was recognized for the three months ended March **31**, **2022** and **2021**[120](index=120&type=chunk) [Note 13. Trade and Bills Payable](index=30&type=section&id=13.%20Trade%20and%20Bills%20Payable) Trade and bills payable increased significantly to **$79.27 million** by March 31, 2022, driven by bank bills Trade and Bills Payable (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :---------------------------- | :----------- | :----------- | | Trade accounts payable | 40,352,638 | 46,550,602 | | Bills payable – Bank acceptance bills | 25,023,574 | 32,719,399 | | **Total** | **65,376,212** | **79,270,001** | - Bank acceptance bills were pledged by the company's bank deposits, bills receivable, and prepaid land use rights[123](index=123&type=chunk) [Note 14. Loans](index=31&type=section&id=14.%20Loans) Short-term bank borrowings increased to **$14.67 million** by March 31, 2022, with new facilities secured Loans (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :---------------------- | :----------- | :----------- | | Short-term bank borrowings | 8,811,820 | 14,674,721 | | Other short-term loans | 4,679,122 | 746,699 | | **Total** | **13,490,942** | **15,421,420** | - The company obtained new one-year term facilities from Agricultural Bank of China, Jiangsu Gaochun Rural Commercial Bank, and China Zheshang Bank Co., Ltd. Shangyu Branch in Q1 **2022**, totaling approximately **$4.8 million**[132](index=132&type=chunk)[133](index=133&type=chunk) - These facilities are secured by pledged deposits, bills receivables, right-of-use assets, buildings, and personal guarantees from the CEO and his wife[135](index=135&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) [Note 15. Accrued Expenses and Other Payables](index=34&type=section&id=15.%20Accrued%20Expenses%20and%20Other%20Payables) Accrued expenses and other payables increased to **$24.48 million** by March 31, 2022, due to customer deposits Accrued Expenses and Other Payables (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :----------------------------------- | :----------- | :----------- | | Construction costs payable | 2,036,008 | 1,529,170 | | Equipment purchase payable | 8,697,637 | 8,079,179 | | Customer deposits | 1,420,414 | 4,671,400 | | Accrued staff costs | 2,924,105 | 2,942,699 | | Accrued expenses | 4,161,548 | 3,601,292 | | Dividend payable to non-controlling interest | 1,444,737 | 1,446,583 | | **Total** | **22,963,700** | **24,477,309** | - The remaining provision for liquidated damages related to registration rights agreements was approximately **$159,000** as of March **31**, **2022**[145](index=145&type=chunk) [Note 16. Balances and Transactions With Related Parties](index=35&type=section&id=16.%20Balances%20and%20Transactions%20With%20Related%20Parties) This note details significant related party transactions and balances, with increased purchases and sales Related Party Transactions (Three Months Ended March 31) | Transaction | 2021 (US$) | 2022 (US$) | | :---------------------------------------------------------------- | :--------- | :--------- | | Purchase of finished goods from Zhengzhou BAK Battery Co., Ltd | 1,259,309 | 5,164,433 | | Sales of finished goods and raw materials to Zhengzhou BAK Battery Co., Ltd | 108,290 | 25,823,532 | | Sales of finished goods and raw materials to Shenzhen BAK Power Battery Co., Ltd | - | 112,468 | Key Related Party Balances (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :---------------------------------------------------------------- | :----------- | :----------- | | Receivables from Shenzhen BAK Power Battery Co., Ltd | 2,263,955 | 1,134,585 | | Trade receivable, net – Zhengzhou BAK Battery Co., Ltd. | 14,583,061 | 12,963,529 | | Trade payable, net – Zhengzhou BAK Battery Co., Ltd | (572,768) | (3,057,449) | | Payables to Shenzhen BAK Power Battery Co., Ltd | (326,507) | (325,624) | [Note 17. Deferred Government Grants](index=38&type=section&id=17.%20Deferred%20Government%20Grants) Deferred government grants decreased to **$9.47 million** by March 31, 2022, amortized against depreciation Deferred Government Grants (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :-------------------- | :----------- | :----------- | | Total government grants | 10,023,677 | 9,473,191 | | Current portion | (3,834,481) | (2,270,463) | | Non-current portion | 6,189,196 | 7,202,728 | | Offset against depreciation expenses (3 months ended Mar 31) | 38,133 (2021) | 566,972 (2022) | - Grants were received for land use rights, construction of manufacturing sites in Dalian, and to finance moving costs, construction works, and equipment purchases in Nanjing[162](index=162&type=chunk)[163](index=163&type=chunk) [Note 18. Product Warranty Provisions](index=39&type=section&id=18.%20Product%20Warranty%20Provisions) Product warranty provisions remained stable at **$2.03 million** by March 31, 2022, for EV and LEV batteries Product Warranty Provisions (US$) | Category | Dec 31, 2021 | Mar 31, 2022 | | :-------------------- | :----------- | :----------- | | Balance at end of year | 2,028,266 | 2,027,664 | | Current portion | (127,837) | (104,122) | | Non-current portion | 1,900,429 | 1,923,542 | | Warranty costs incurred | (34,439) (2021) | (9,419) (2022) | - Warranty coverage ranges from **six months** to **eight years**, depending on the product (battery cells, LEV modules, EV modules)[167](index=167&type=chunk) [Note 19. Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities](index=40&type=section&id=19.%20Income%20Taxes%2C%20Deferred%20Tax%20Assets%20and%20Deferred%20Tax%20Liabilities) The company recorded an income tax credit for Q1 2022, with PRC subsidiaries enjoying a **15%** preferential rate Income Taxes (US$) | Category | Mar 31, 2021 | Mar 31, 2022 | | :-------------------- | :----------- | :----------- | | PRC income tax | - | - | | Deferred income tax credit | - | 93,546 | | **Total Income tax credit** | **-** | **93,546** | - CBAK Power and Hitrans are recognized as 'High-new technology enterprises' and enjoy a preferential tax rate of **15%** from **2021** to **2024**[177](index=177&type=chunk) - A valuation allowance of **$36.75 million** was provided as of March **31**, **2022**, against deferred tax assets due to the unlikelihood of realizing these potential tax benefits in the foreseeable future[181](index=181&type=chunk) [Note 20. Statutory reserves](index=42&type=section&id=20.%20Statutory%20reserves) PRC subsidiaries maintain statutory reserves, with **$1.23 million** held as of March 31, 2022, restricted from distribution - PRC subsidiaries are required to maintain a statutory reserve, with **$1.23 million** held as of March **31**, **2022**[185](index=185&type=chunk) - The statutory reserve is restricted for distribution or transfer out of the PRC[185](index=185&type=chunk) [Note 21. Fair Value of Financial Instruments](index=42&type=section&id=21.%20Fair%20Value%20of%20Financial%20Instruments) The company uses a three-level hierarchy for fair value measurements, with warrants valued using the Binomial Model - The company classifies fair value measurements into **Level 1** (quoted prices), **Level 2** (observable inputs), and **Level 3** (unobservable, significant inputs)[186](index=186&type=chunk)[187](index=187&type=chunk) - The fair value of warrants and share options is determined using the Binomial Model with **Level 3** inputs[189](index=189&type=chunk) - The carrying amounts of most other financial assets and liabilities approximate their fair values due to their short maturity or market interest rates[189](index=189&type=chunk) [Note 22. Employee Benefit Plan](index=43&type=section&id=22.%20Employee%20Benefit%20Plan) The company participates in a government-mandated defined contribution plan, with increased employee benefits expensed Employee Benefits Expensed (US$) | Period | Amount | | :-------------------------- | :--------- | | Three months ended Mar 31, 2021 | 255,989 | | Three months ended Mar 31, 2022 | 569,536 | - Full-time employees in the PRC participate in a government-mandated defined contribution plan covering pension, medical care, housing, and other welfare benefits[190](index=190&type=chunk) [Note 23. Share-based Compensation](index=43&type=section&id=23.%20Share-based%20Compensation) This note details restricted share and stock option grants, with decreased share-based compensation expenses - Total non-cash share-based compensation expense decreased from **$148,818** for Q1 **2021** to **$34,779** for Q1 **2022**[16](index=16&type=chunk) - An Employees Stock Ownership Program granted options for **2,750,002** share units in November **2021**, with vesting semi-annually over five years starting May **30**, **2022**. No stock compensation expenses were recorded for Q1 **2022**[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - As of March **31**, **2022**, there was **$35,942** in unrecognized stock-based compensation associated with restricted share units granted on October **23**, **2020**[202](index=202&type=chunk) [Note 24. Income (Loss) Per Share](index=46&type=section&id=24.%20Income%20(Loss)%20Per%20Share) Basic and diluted EPS significantly decreased to **$0.01** for Q1 2022, reflecting a sharp decline in net income Income Per Share (US$) | Metric | Mar 31, 2021 | Mar 31, 2022 | | :-------------------------------------------------- | :----------- | :----------- | | Basic Income per share | 0.35 | 0.01 | | Diluted Income per share | 0.35 | 0.01 | | Weighted average shares outstanding – basic | 84,283,605 | 88,713,841 | | Weighted average shares outstanding – diluted | 84,933,913 | 88,734,957 | - For the three months ended March **31**, **2022**, **2,750,002** unvested options and all outstanding warrants were anti-dilutive and excluded from diluted EPS computation[211](index=211&type=chunk) [Note 25. Warrants](index=46&type=section&id=25.%20Warrants) Warrants are derivative liabilities, with a **$1.63 million** fair value gain in Q1 2022 due to share price decline Warrants Liability (US$) | Metric | Dec 31, 2021 | Mar 31, 2022 | | :------------------------------------------------ | :----------- | :----------- | | Balance at the beginning of the year | 5,846,000 | 5,846,000 | | Fair value change of the issued warrants included in earnings | (61,802,000) (FY2021) | (1,632,000) (Q1 2022) | | **Balance at end of period** | **5,846,000** | **4,214,000** | - The fair value of outstanding warrants is calculated using the Binomial Model with **Level 3** inputs, considering market price, exercise price, risk-free rate, dividend yield, expected term, and volatility[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[219](index=219&type=chunk) - As of March **31**, **2022**, there were **9,092,499** warrants outstanding with a weighted average exercise price of **$7.19**[220](index=220&type=chunk) [Note 26. Commitments and Contingencies](index=49&type=section&id=26.%20Commitments%20and%20Contingencies) The company has **$172 million** in capital commitments and is involved in ongoing litigation Contracted Capital Commitments (US$ as of Mar 31, 2022) | Category | Amount | | :-------------------------- | :----------- | | For construction of buildings | 1,582,346 | | For purchases of equipment | 13,093,091 | | Capital injection | 157,296,525 | | **Total** | **171,971,962** | - An ongoing lawsuit with Shenzhen Huijie Purification System Engineering Co., Ltd. regarding construction costs was remanded for retrial, with CBAK Power accruing **$0.9 million** for construction costs as of March **31**, **2022**[225](index=225&type=chunk) - A lawsuit with Haoneng for equipment purchase failure was settled by an agreement requiring CBAK Power to purchase at least **$2.4 million** in equipment by December **31**, **2023**, or pay a penalty[227](index=227&type=chunk) [Note 27. Concentrations and Credit Risk](index=50&type=section&id=27.%20Concentrations%20and%20Credit%20Risk) The company faces significant customer and supplier concentrations, managing credit risk with major PRC financial institutions Customer Concentration (Q1 2022) | Customer | % of Net Revenue | | :--------- | :--------------- | | Customer D | 30.05% | | Zhengzhou BAK Battery Co., Ltd | 32.20% | Supplier Concentration (Q1 2022) | Supplier | % of Net Purchase | | :--------- | :---------------- | | Supplier B | 25.30% | | Supplier C | 23.71% | - Credit risk related to cash and cash equivalents is managed by holding funds in major financial institutions located in the PRC, which management believes are of high credit quality[236](index=236&type=chunk) [Note 28. Segment Information](index=51&type=section&id=28.%20Segment%20Information) The company operates in two segments: CBAK (lithium battery cells) and Hitrans (materials), primarily in PRC - The company operates in two reportable segments: CBAK (manufacture and distribution of high-power lithium battery cells) and Hitrans (development and manufacturing of NCM precursor and cathode materials)[237](index=237&type=chunk) Net Revenues by Segment (Three Months Ended March 31, 2022) | Segment | Net Revenues (US$) | | :------ | :----------------- | | CBAT | 15,020,686 | | Hitrans | 65,175,612 | | **Consolidated Total** | **80,196,298** | Net Revenues by Product (Three Months Ended March 31) | Product Category | 2021 (US$) | 2022 (US$) | | :------------------------------------------------ | :--------- | :--------- | | High power lithium batteries | 9,416,049 | 15,020,686 | | Materials used in manufacturing of lithium batteries | - | 65,175,612 | | **Total Consolidated Revenue** | **9,416,049** | **80,196,298** | - Substantially all of the company's operations and long-lived assets are located in the PRC[238](index=238&type=chunk)[245](index=245&type=chunk) [Note 29. Subsequent events](index=53&type=section&id=29.%20Subsequent%20events) No material subsequent events were disclosed between March 31, 2022, and the financial statements issue date - The company has determined that there are no items to disclose as subsequent events from March **31**, **2022**, to the date the financial statements were issued[246](index=246&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q1 2022 financial condition, revenue growth, operating loss, and liquidity challenges [Special Note Regarding Forward Looking Statements](index=54&type=section&id=Special%20Note%20Regarding%20Forward%20Looking%20Statements) This note clarifies that the report contains forward-looking statements subject to risks and uncertainties - The report contains forward-looking statements that are not guarantees of future performance and involve risks and uncertainties[249](index=249&type=chunk) - The company disclaims any obligation to update or revise forward-looking statements, except as required by law[250](index=250&type=chunk) [Use of Terms](index=54&type=section&id=Use%20of%20Terms) This section defines key terms and abbreviations used throughout the report - This section defines key terms and abbreviations used throughout the report, including company names, subsidiaries, currencies, and regulatory bodies[251](index=251&type=chunk)[253](index=253&type=chunk) [Overview](index=55&type=section&id=Overview) The company manufactures lithium batteries, expanded into NCM materials via Hitrans, and is expanding capabilities - The company manufactures new energy high-power lithium batteries and has expanded into NCM precursor and cathode materials through the acquisition of Hitrans[254](index=254&type=chunk) - The company operates in two segments: high-power lithium battery cells and materials used in high-power lithium battery cells[255](index=255&type=chunk) - The company is expanding manufacturing capabilities in Dalian and Nanjing and expects to secure more orders from the booming new energy market[257](index=257&type=chunk) [Financial Performance Highlights for the Quarter Ended March 31, 2022](index=56&type=section&id=Financial%20Performance%20Highlights%20for%20the%20Quarter%20Ended%20March%2031%2C%202022) This section summarizes key financial metrics and performance trends for Q1 2022 Financial Highlights (Three Months Ended March 31, 2022 vs 2021) | Metric | 2021 (US$ Million) | 2022 (US$ Million) | Change (US$ Million) | Change (%) | | :-------------------- | :----------------- | :----------------- | :------------------- | :--------- | | Net revenues | 9.4 | 80.2 | 70.8 | 752% | | Gross profit | 1.8 | 5.3 | 3.5 | 189% | | Operating loss | (0.03) | (1.3) | (1.3) | 4668% | | Net income | 29.6 | 0.7 | (28.9) | -98% | | Fully diluted EPS | 0.35 | 0.01 | (0.34) | -97% | [Financial Statement Presentation](index=56&type=section&id=Financial%20Statement%20Presentation) This section describes the accounting policies and principles applied in preparing the financial statements - Revenue from product sales is recognized upon delivery to the customer, net of discounts and allowances[261](index=261&type=chunk) - Cost of revenues includes material costs, employee remuneration, share-based compensation, depreciation, and inventory write-downs[262](index=262&type=chunk) - PRC subsidiaries are subject to a **25%** income tax rate, with Hitrans and CBAK Power enjoying a preferential **15%** rate as 'High and New Technology Enterprises'[264](index=264&type=chunk) [Results of Operations](index=57&type=section&id=Results%20of%20Operations) This section analyzes the company's revenues, costs, and profitability for the reporting period Net Revenues by Product (Three Months Ended March 31) | Product Category | 2021 (US$ Million) | 2022 (US$ Million) | Change (US$ Million) | Change (%) | | :------------------------------------------------ | :----------------- | :----------------- | :------------------- | :--------- | | High power lithium batteries | 9.4 | 15.0 | 5.6 | 60% | | Materials used in manufacturing of lithium batteries | - | 65.2 | 65.2 | - | | **Total** | **9.4** | **80.2** | **70.8** | **752%** | - Gross profit margin decreased from **19.5%** in Q1 **2021** to **6.6%** in Q1 **2022**, mainly due to an increase in raw material prices[272](index=272&type=chunk) - Research and development expenses increased by **585%** to **$3.3 million** in Q1 **2022**, driven by the incorporation of Hitrans' R&D personnel, growth at Nanjing CBAK and Nanjing Daxin, and higher material costs[273](index=273&type=chunk) - The change in fair value of warrants liability resulted in a gain of **$1.6 million** in Q1 **2022**, a significant decrease from the **$28.4 million** gain in Q1 **2021**, primarily due to share price decline[278](index=278&type=chunk) [Liquidity and Capital Resources](index=60&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash position, working capital, and ability to meet financial obligations - As of March **31**, **2022**, the company had a net working capital of **$13.2 million** and an accumulated deficit of **$122.1 million**, raising substantial doubt about its ability to continue as a going concern[280](index=280&type=chunk)[281](index=281&type=chunk) Summary of Cash Flows (Three Months Ended March 31) | Activity | 2021 (US$ Million) | 2022 (US$ Million) | | :------------------------------------ | :----------------- | :----------------- | | Net cash provided by operating activities | 0.8 | 5.1 | | Net cash used in investing activities | (5.7) | (2.7) | | Net cash provided by financing activities | 65.4 | 1.9 | | Cash and cash equivalents at end of period | 81.4 | 30.8 | - The company plans to renew existing loans upon maturity and raise additional funds through bank borrowings and equity financing to meet daily cash demands and finance expansion[299](index=299&type=chunk) [Capital Expenditures](index=66&type=section&id=Capital%20Expenditures) This section details the company's investments in property, plant, and equipment for future growth - Capital expenditures decreased to **$3.4 million** in Q1 **2022** from **$5.7 million** in Q1 **2021**, primarily for the construction of Dalian and Nanjing facilities[308](index=308&type=chunk) - Estimated total capital expenditures for fiscal year **2022** are approximately **$15.0 million**, allocated for renovating product lines and constructing new plants[308](index=308&type=chunk) [Critical Accounting Policies](index=66&type=section&id=Critical%20Accounting%20Policies) This section highlights accounting policies requiring significant judgment and estimation - There were no material changes to the critical accounting policies previously disclosed in the Annual Report on Form **10-K** for the year ended December **31**, **2021**[310](index=310&type=chunk) [Changes in Accounting Standards](index=66&type=section&id=Changes%20in%20Accounting%20Standards) This section addresses the impact of recently adopted or issued accounting pronouncements - Refer to Note **1** of the condensed consolidated financial statements for discussions on recently adopted and recently issued but not yet adopted accounting pronouncements[311](index=311&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) This section states no material quantitative or qualitative disclosures about market risk are applicable - This section is not applicable for the current reporting period, indicating no material market risk disclosures are required[312](index=312&type=chunk) [Item 4. Controls and Procedures](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures.) Management concluded disclosure controls were ineffective due to material weaknesses; remediation efforts are underway [Evaluation of Disclosure Controls and Procedures](index=66&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective as of March 31, 2022 - Management concluded that the company's disclosure controls and procedures were ineffective as of March **31**, **2022**[315](index=315&type=chunk) - Material weaknesses identified include a lack of appropriate policies and procedures for evaluating accounting and disclosures of key documents, and insufficient skilled accounting personnel[315](index=315&type=chunk)[316](index=316&type=chunk) [Changes in Internal Control over Financial Reporting](index=67&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Remediation efforts include hiring a CFO and providing financial personnel training to address weaknesses - Remediation measures include hiring a permanent Chief Financial Officer with significant U.S. GAAP and SEC reporting experience[316](index=316&type=chunk) - The company is providing regular training to financial personnel on internal control, risk management, and U.S. GAAP accounting guidelines[317](index=317&type=chunk) - Except for the described matters, there were no other changes in internal controls over financial reporting during Q1 **2022** that materially affected or are reasonably likely to materially affect internal control[319](index=319&type=chunk) PART II OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, and other required disclosures [Item 1. Legal Proceedings](index=68&type=section&id=Item%201.%20Legal%20Proceedings.) Information on legal proceedings is incorporated by reference from Note 26 'Commitments and Contingencies' - Information on legal proceedings is incorporated by reference from Note **26** 'Commitments and Contingencies—(ii) Litigation' in the financial statements[322](index=322&type=chunk) [Item 1A. Risk Factors](index=68&type=section&id=Item%201A.%20Risk%20Factors.) No material changes from risk factors previously disclosed in the Annual Report on Form 10-K for 2021 - There are no material changes from the risk factors previously disclosed in the Annual Report on Form **10-K** for the fiscal year ended December **31**, **2021**[323](index=323&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds.) No unregistered sales of equity securities or common stock repurchases occurred during the period - No unregistered sales of equity securities or repurchase of common stock occurred during the period covered by this report, other than as previously disclosed in current reports on Form **8-K**[323](index=323&type=chunk) [Item 3. Defaults Upon Senior Securities](index=68&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities.) There were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[323](index=323&type=chunk) [Item 4. Mine Safety Disclosures](index=68&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[323](index=323&type=chunk) [Item 5. Other Information](index=68&type=section&id=Item%205.%20Other%20Information.) There is no other information to report for the period - There is no other information to report[323](index=323&type=chunk) [Item 6. Exhibits](index=68&type=section&id=Item%206.%20Exhibits.) This section lists the exhibits filed as part of the Form 10-Q report, including certifications and XBRL files - Exhibits include Certifications of Principal Executive Officer (**31.1**, **32.1**) and Principal Financial Officer (**31.2**, **32.2**) pursuant to the Sarbanes-Oxley Act of **2002**[324](index=324&type=chunk) - The report also includes various Inline XBRL Taxonomy Extension Documents (**101.INS**, **101.SCH**, **101.CAL**, **101.DEF**, **101.LAB**, **101.PRE**)[324](index=324&type=chunk)