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CBAK Energy(CBAT) - 2025 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Item 1. Financial Statements The company's unaudited statements show decreased revenue, a net loss, a working capital deficit, and a going concern warning Condensed Consolidated Balance Sheets Total assets and liabilities grew, driven by construction in progress and increased payables, resulting in decreased total equity Condensed Consolidated Balance Sheet Highlights (in US$) | Account | December 31, 2024 | June 30, 2025 | | :--- | :--- | :--- | | Total Current Assets | $141,396,860 | $143,447,915 | | Total Assets | $302,218,144 | $333,094,266 | | Total Current Liabilities | $171,700,980 | $199,414,338 | | Total Liabilities | $182,150,979 | $217,250,126 | | Total Equity | $120,067,165 | $115,844,139 | Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) The company experienced a significant profitability downturn, with decreased net revenues leading to a net loss for Q2 and H1 2025 Key Performance Indicators (in US$) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $40,524,333 | $47,793,045 | $75,463,234 | $106,615,477 | | Gross Profit | $4,462,409 | $12,728,026 | $9,264,143 | $31,509,073 | | Operating Income (Loss) | ($3,528,576) | $5,947,480 | ($6,392,595) | $16,210,463 | | Net Income (Loss) | ($3,360,398) | $6,023,185 | ($5,411,380) | $15,595,659 | | Diluted EPS | ($0.03) | $0.07 | ($0.05) | $0.18 | Condensed Consolidated Statements of Cash Flows Cash from operations decreased while cash used in investing increased, driven by equipment purchases and loan repayments Cash Flow Summary for the Six Months Ended June 30 (in US$) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,147,364 | $10,389,049 | | Net cash used in investing activities | ($20,614,071) | ($16,952,026) | | Net cash used in financing activities | ($24,574,107) | ($31,571,178) | | Net decrease in cash and cash equivalents | ($39,333,780) | ($38,695,249) | | Cash and cash equivalents at end of period | $21,452,222 | $20,127,567 | Notes to the Condensed Consolidated Financial Statements Notes reveal substantial doubt about going concern status, a new stock repurchase program, and segment operating details - The company's financial condition, including an accumulated deficit and working capital deficiency, raises substantial doubt about its ability to continue as a going concern76 - On May 20, 2025, the company authorized a stock repurchase program for up to $20 million; as of June 30, 2025, 1,087,981 shares were repurchased for $1.2 million71 - The company operates in two segments: CBAK (lithium-ion batteries) and Hitrans (NCM precursor and cathode materials)248 Revenue by Segment (Three Months Ended June 30, 2025) | Segment | Net Revenues (in US$) | | :--- | :--- | | CBAT | $21,090,137 | | Hitrans | $19,434,196 | | Total | $40,524,333 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes a 15% Q2 revenue drop and operating loss to a product line upgrade, highlighting liquidity pressure Results of Operations Q2 net revenues fell 15% due to a sharp decline in residential battery sales, causing a 65% drop in gross profit Comparison of Three Months Ended June 30 (in thousands of US$) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Revenues | $40,524 | $47,794 | -15% | | Gross Profit | $4,462 | $12,729 | -65% | | Operating Income (Loss) | ($3,529) | $5,948 | -159% | | Net Income (Loss) Attributable to Shareholders | ($3,073) | $6,446 | -148% | - The revenue decrease was primarily due to a 45% decline in sales of batteries for residential energy supply, stemming from a product portfolio upgrade279 - Net revenues from sales of battery materials increased by 59% as the raw materials division expanded its market presence and secured new customers280 Liquidity and Capital Resources Significant liquidity constraints are evident from a working capital deficit, raising substantial doubt about its going concern status - As of June 30, 2025, the company had a net working capital deficit of $56.0 million and an accumulated deficit of $129.1 million, raising substantial doubts about its ability to continue as a going concern313314 - Capital expenditures for H1 2025 were $22.3 million, with an estimated total of $50.0 million for the full fiscal year362 Summary of Cash Flows for Six Months Ended June 30 (in thousands of US$) | Period | Net cash provided by operating activities | Net cash used in investing activities | Net cash used in financing activities | | :--- | :--- | :--- | :--- | | 2025 | $4,147 | ($20,614) | ($24,574) | | 2024 | $10,389 | ($16,952) | ($31,571) | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states this section is not applicable for the current reporting period - The company states this item is 'Not applicable'366 Item 4. Controls and Procedures Management concluded disclosure controls were ineffective due to material weaknesses in accounting policies and personnel expertise - Management concluded that disclosure controls and procedures were ineffective as of June 30, 2025368 - Identified material weaknesses include a lack of appropriate accounting policies and insufficient skilled personnel with U.S. GAAP experience369371 PART II OTHER INFORMATION Item 1. Legal Proceedings A settled lawsuit resulted in a $2.2 million capital commitment for equipment not yet received as of the reporting date - A lawsuit with Haoneng was settled, obligating CBAK Power to purchase equipment, resulting in a capital commitment of $2.2 million (RMB 15,120,000)239 Item 1A. Risk Factors No material changes were reported to the risk factors disclosed in the 2024 Annual Report - There are no material changes from the risk factors disclosed in the 2024 Annual Report on Form 10-K374 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company initiated a $20 million stock repurchase program and bought back 1,087,981 shares during the quarter Issuer Repurchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid Per Share ($) | Value of Shares that May Yet Be Purchased ($) | | :--- | :--- | :--- | :--- | | May 2025 | 33,539 | 0.945 | 19,968,305 | | June 2025 | 1,054,442 | 1.134 | 18,762,880 | | Total | 1,087,981 | - | 18,762,880 | Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None reported378 Item 4. Mine Safety Disclosures This section is not applicable to the company - Not applicable379 Item 5. Other Information No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the fiscal quarter380 Item 6. Exhibits Filed exhibits include officer certifications required by the Sarbanes-Oxley Act and interactive data files - Exhibits filed include certifications from the CEO and CFO pursuant to the Sarbanes-Oxley Act of 2002, along with XBRL data files381