UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 001-32898

CBAK ENERGY TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		88-0442833
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

BAK Industrial Park, Meigui Street
Huayuankou Economic Zone
Dalian City, Liaoning Province,
People’s Republic of China, 116450

(Address of principal executive offices, Zip Code)

(86)(411)-3918-5985

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value		CBAT		Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of each of the issuer’s classes of common stock, as of May 14, 2026 is as follows:

Class of Securities		Shares Outstanding
Common Stock, $0.001 par value		88,645,836

CBAK ENERGY TECHNOLOGY, INC.

TABLE OF CONTENTS

PART I
	FINANCIAL INFORMATION
Item 1.	Financial Statements.	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	44
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	55
Item 4.	Controls and Procedures.	55

PART II
	OTHER INFORMATION
Item 1.	Legal Proceedings.	56
Item 1A.	Risk Factors.	56
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	56
Item 3.	Defaults Upon Senior Securities.	56
Item 4.	Mine Safety Disclosures.	56
Item 5.	Other Information.	56
Item 6.	Exhibits.	57

PART I
FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FINANCIAL STATEMENTS

CBAK ENERGY TECHNOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED

MARCH 31, 2025 AND 2026

CBAK ENERGY TECHNOLOGY, INC.

AND SUBSIDIARIES

TABLE OF CONTENTS

Contents		Page(s)
Condensed Consolidated Balance Sheets as of December 31, 2025 and March 31, 2026 (unaudited)		2
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2025 and 2026 (unaudited)		3
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 31, 2025 and 2026 (unaudited)		4
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2026 (unaudited)		5
Notes to the Condensed Consolidated Financial Statements (unaudited)		6

CBAK Energy Technology, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

As of December 31, 2025 and March 31, 2026

(Unaudited)

(In US$ except for number of shares)

	Note	December 31, 2025			March 31, 2026
Assets
Current assets
Cash and cash equivalents		$	8,301,149		$	9,338,921
Pledged deposits	2		67,376,113			89,257,922
Trade and bills receivable, net	3		38,405,398			46,499,152
Inventories	4		50,602,287			75,673,735
Prepayments and other receivables	5		15,170,915			16,863,416
Receivables from former subsidiary	16		4,389			2,459
Income tax recoverable			778,460			790,171
Total current assets			180,638,711			238,425,776

Property, plant and equipment, net	6		179,058,801			188,221,344
Construction in progress	7		32,046,421			29,689,789
Long-term investments, net	8		2,485,580			2,522,973
Prepaid land use rights	9		12,308,864			12,405,935
Intangible assets, net	10		71,654			68,309
Deposit paid for acquisition of long-term investments	12		16,503,014			16,751,291
Operating lease right-of-use assets, net			3,068,591			2,920,127
Total assets		$	426,181,636		$	491,005,544

Liabilities
Current liabilities
Trade and bills payable	13	$	153,345,745		$	203,021,449
Short-term bank borrowings	14		28,532,938			37,386,698
Other short-term loans	14		337,156			337,715
Accrued expenses and other payables	15		113,651,948			122,673,008
Payable to a former subsidiary, net	16		407,506			402,708
Deferred government grants, current	17		578,606			587,312
Product warranty provisions	18		339,136			482,978
Operating lease liability, current	9		1,347,803			1,178,848
Finance lease liability, current	9		1,307,170			2,124,717
Income tax payable			-			7,427
Total current liabilities			299,848,008			368,202,860

Long-term bank borrowings	14		4,118,628			7,652,360
Deferred government grants, non-current	17		10,195,428			10,201,984
Product warranty provisions	18		446,553			413,301
Operating lease liability, non-current	9		2,093,428			2,228,986
Finance lease liability, non-current	9		-			97,281
Total liabilities			316,702,045			388,796,772

Commitments and contingencies	26

Shareholders’ equity
Common stock $0.001 par value; 500,000,000 authorized; 88,645,836 issued and outstanding as of December 31, 2025 and March 31, 2026			88,646			88,646
Donated shares			7,955,358			7,955,358
Additional paid-in capital			248,500,176			248,500,619
Statutory reserves	21		3,042,602			3,042,602
Accumulated deficit			(133,795,940	)		(143,083,312	)
Accumulated other comprehensive loss			(13,112,769	)		(11,342,954	)
Total shareholders’ equity			112,678,073			105,160,959
Non-controlling interests			(3,198,482	)		(2,952,187	)
Total equity			109,479,591			102,208,772

Total liabilities and shareholder’s equity		$	426,181,636		$	491,005,544

See accompanying notes to the condensed consolidated financial statements.

CBAK Energy Technology, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

For the three months ended March 31, 2025 and 2026

(Unaudited)

(In US$ except for number of shares)

		Three months ended March 31,
	Note	2025			2026
Net revenues	28	$	34,938,901		$	69,617,992
Cost of revenues			(30,137,167	)		(68,578,124	)
Gross profit			4,801,734			1,039,868
Operating expenses:
Research and development expenses			(3,023,961	)		(4,219,925	)
Sales and marketing expenses			(896,050	)		(1,998,104	)
General and administrative expenses			(3,804,137	)		(4,510,224	)
Allowance of credit losses and bad debts written off			58,395			(12,198	)
Total operating expenses			(7,665,753	)		(10,740,451	)
Operating loss			(2,864,019	)		(9,700,583	)
Finance income (expenses), net			45,120			(416,095	)
Other income, net			712,792			2,068,069
Share of (loss) income of equity investee			55,125			-
Loss on derivatives instruments			-			(906,255	)
Loss before income tax			(2,050,982	)		(8,954,864	)
Income tax expenses	20		-			(7,426	)
Net loss			(2,050,982	)		(8,962,290	)
Less: Net loss (income) attributable to non-controlling interests			471,748			(325,082	)
Net loss attributable to shareholders of CBAK Energy Technology, Inc.		$	(1,579,234	)	$	(9,287,372	)

Net loss			(2,050,982	)		(8,962,290	)
Other comprehensive loss
– Foreign currency translation adjustment			699,844			1,691,028
Comprehensive loss			(1,351,138	)		(7,271,262	)
Less: Comprehensive loss (income) attributable to non-controlling interests			442,816			(246,295	)
Comprehensive loss attributable to CBAK Energy Technology, Inc.		$	(908,322	)	$	(7,517,557	)

Income (loss) per share	25
– Basic		$	(0.02	)	$	(0.10	)
– Diluted		$	(0.02	)	$	(0.10	)

Weighted average number of shares of common stock:	25
– Basic			89,938,690			89,247,119
– Diluted			89,938,690			89,247,119

See accompanying notes to the condensed consolidated financial statements.

CBAK Energy Technology, Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Shareholders’ Equity

For the three months ended March 31, 2025 and 2026

(Unaudited)

(In US$ except for number of shares)

	Common stock issued						Additional		Statutory					Accumulated other			Non-			Treasury shares						Total
	Number				Donated		paid-in		reserves		Accumulated			comprehensive			controlling			Number						shareholders’
	of shares		Amount		shares		capital		(Note 21)		deficit			Income (loss)			interests			of shares			Amount			equity
Balance as of January 1, 2025		90,083,396	$	90,083	$	14,101,689	$	247,842,445	$	1,230,511	$	(122,605,730	)	$	(14,919,345	)	$	(1,605,878	)		(144,206	)	$	(4,066,610	)	$	120,067,165

Net loss		-		-		-		-		-		(1,579,234	)		-			(471,748	)		-			-			(2,050,982	)

Exercise of stock options		472		-		-		-		-		-			-			-			-			-			-

Share-based compensation for employee and director stock awards		-		-		-		27,066		-		-			-			-			-			-			27,066

Appropriation to statutory reserves		-		-		-		-		1,812,091		(1,812,091	)		-			-			-			-			-

Foreign currency translation adjustment		-		-		-		-		-		-			670,911			28,933									699,844

Balance as of March 31, 2025		90,083,868	$	90,083	$	14,101,689	$	247,869,511	$	3,042,602	$	(125,997,055	)	$	(14,248,434	)	$	(2,048,693	)		(144,206	)	$	(4,066,610	)	$	118,743,093

Balance as of January 1, 2026		88,645,836		88,646		7,955,358		248,500,176		3,042,602		(133,795,940	)		(13,112,769	)		(3,198,482	)		-			-			109,479,591

Net income (loss)		-		-		-		-		-		(9,287,372	)		-			325,082			-			-			(8,962,290	)

Share-based compensation for employee and director stock awards		-		-		-		443		-		-			-			-			-			-			443

Foreign currency translation adjustment		-		-		-		-		-		-			1,769,815			(78,787	)		-			-			1,691,028

Balance as of March 31, 2026		88,645,836	$	88,646	$	7,955,358	$	248,500,619	$	3,042,602	$	(143,083,312	)	$	(11,342,954	)	$	(2,952,187	)		-		$	-		$	102,208,772

See accompanying notes to the condensed consolidated financial statements.

CBAK Energy Technology, Inc. and subsidiaries

Condensed consolidated statements of cash flows

For the three months ended March 31, 2025 and 2026

(Unaudited)

(In US$)

	Three months ended March 31,
	2025			2026
Cash flows from operating activities
Net loss	$	(2,050,982	)	$	(8,962,290	)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		2,123,633			3,426,644
Allowance for credit losses		(58,395	)		48,817
Write-down of inventories		934,424			2,592,622
Share-based compensation		27,066			443
Share of (income) of an equity investee		(55,125	)		-
Amortization of operating lease right-of-use assets		292,950			254,310
Change in fair value of financial derivatives		-			1,128,941
Loss on disposal of property, plant and equipment		-			205,945
Changes in operating assets and liabilities:
Trade and bills receivable		(7,717,786	)		(7,550,444	)
Inventories		(8,748,990			(26,753,382	)
Prepayments and other receivables		1,987,955			(1,043,933	)
Trade and bills payable		8,206,996			47,272,981
Accrued expenses and other payables and product warranty provisions		(4,441,468	)		11,807,100
Lease liabilities		(124,846	)		(145,066	)
Trade receivable from and payables to a former subsidiary		3,447			1,992
Net cash (used in) provided by operating activities		(9,621,121	)		22,284,680

Cash flows from investing activities
Purchases of property, plant and equipment and construction in progress		(12,689,383	)		(11,784,371	)
Government subsidy		2,786,615			-
Net cash used in investing activities		(9,902,768	)		(11,784,371	)

Cash flows from financing activities
Proceeds from bank borrowings		24,337,737			23,251,835
Repayment of bank borrowings		(17,143,957	)		(11,379,607	)
Principal payments on finance leases		-			(558,210	)
Placement of term deposits		(1,268,009	)		-
Net cash provided by financing activities		5,925,771			11,314,018

Effect of exchange rate changes on cash and cash equivalents and restricted cash		346,819			1,105,254
Net (decrease) increase in cash and cash equivalents and restricted cash		(13,251,299	)		22,919,581
Cash and cash equivalents and restricted cash at the beginning of period		60,786,002			75,677,262
Cash and cash equivalents and restricted cash at the end of period	$	47,534,703		$	98,596,843
Supplemental non-cash investing and financing activities:
Transfer of construction in progress to property, plant and equipment	$	461,234		$	11,575,706

Cash paid during the period for:
Income taxes	$	-		$	-
Interest, net of amounts capitalized	$	155,212		$	252,420

See accompanying notes to the condensed consolidated financial statements.

CBAK Energy Technology, Inc. and subsidiaries

Notes to the condensed consolidated financial statements

For the three months ended March 31, 2025 and 2026

(Unaudited)

(In US$ except for number of shares)

1.	Principal Activities, Basis of Presentation and Organization

CBAK Energy Technology, Inc. (formerly known as China BAK Battery, Inc.) (“CBAK” or the “Company”) is a corporation formed in the State of Nevada on October 4, 1999 as Medina Copy, Inc. The Company changed its name to Medina Coffee, Inc. on October 6, 1999 and subsequently changed its name to China BAK Battery, Inc. on February 14, 2005. CBAK and its subsidiaries (hereinafter, collectively referred to as the “Company”) are principally engaged in the manufacture, commercialization and distribution of a wide variety of standard and customized lithium-ion (known as “Li-ion” or “Li-ion cell”) high power rechargeable batteries. Prior to the disposal of BAK International Limited (“BAK International”) and its subsidiaries (see below), the batteries produced by the Company were for use in cellular telephones, as well as various other portable electronic applications, including high-power handset telephones, laptop computers, power tools, digital cameras, video camcorders, MP3 players, electric bicycles, hybrid/electric vehicles, and general industrial applications. After the disposal of BAK International and its subsidiaries on June 30, 2014, the Company focus on the manufacture, commercialization and distribution of high power lithium-ion rechargeable batteries for use in cordless power tools, light electric vehicles, hybrid electric vehicles, electric cars, electric busses, uninterruptable power supplies and other high power applications.

The shares of the Company traded in the over-the-counter market through the Over-the-Counter Bulletin Board from 2005 until May 31, 2006, when the Company obtained approval to list its common stock on The NASDAQ Global Market, and trading commenced that same date under the symbol “CBAK”.

On January 10, 2017, the Company filed Articles of Merger with the Secretary of State of Nevada to effectuate a merger between the Company and the Company’s newly formed, wholly owned subsidiary, CBAK Merger Sub, Inc. (the “Merger Sub”). According to the Articles of Merger, effective January 16, 2017, the Merger Sub merged with and into the Company with the Company being the surviving entity (the “Merger”). As permitted by Chapter 92A.180 of Nevada Revised Statutes, the sole purpose of the Merger was to effect a change of the Company’s name.

Effective November 30, 2018, the trading symbol for common stock of the Company was changed from CBAK to CBAT. Effective at the opening of business on June 21, 2019, the Company’s common stock started trading on the Nasdaq Capital Market.

Basis of Presentation and Organization

On November 6, 2004, BAK International, a non-operating holding company that had substantially the same shareholders as Shenzhen BAK Battery Co., Ltd (“SZ BAK”), entered into a share swap transaction with the shareholders of SZ BAK for the purpose of the subsequent reverse acquisition of the Company. The share swap transaction between BAK International and the shareholders of SZ BAK was accounted for as a reverse acquisition of SZ BAK with no adjustment to the historical basis of the assets and liabilities of SZ BAK.

On January 20, 2005, the Company completed a share swap transaction with the shareholders of BAK International. The share swap transaction, also referred to as the “reverse acquisition” of the Company, was consummated under Nevada law pursuant to the terms of a Securities Exchange Agreement entered by and among CBAK, BAK International and the shareholders of BAK International on January 20, 2005. The share swap transaction has been accounted for as a capital-raising transaction of the Company whereby the historical financial statements and operations of SZ BAK are consolidated using historical carrying amounts.

Also on January 20, 2005, immediately prior to consummating the share swap transaction, BAK International executed a private placement of its common stock with unrelated investors whereby it issued an aggregate of 1,720,087 shares of common stock for gross proceeds of $17,000,000. In conjunction with this financing, Mr. Xiangqian Li, the Chairman and Chief Executive Officer of the Company (“Mr. Li”) until March 1, 2016, agreed to place 435,910 shares of the Company’s common stock owned by him into an escrow account pursuant to an Escrow Agreement dated January 20, 2005 (the “Escrow Agreement”). Pursuant to the Escrow Agreement, 50% of the escrowed shares were to be released to the investors in the private placement if audited net income of the Company for the fiscal year ended September 30, 2005 was not at least $12,000,000, and the remaining 50% was to be released to investors in the private placement if audited net income of the Company for the fiscal year ended September 30, 2006 was not at least $27,000,000. If the audited net income of the Company for the fiscal years ended September 30, 2005 and 2006 reached the above-mentioned targets, the 435,910 shares would be released to Mr. Li in the amount of 50% upon reaching the 2005 target and the remaining 50% upon reaching the 2006 target.

Under accounting principles generally accepted in the United States of America (“US GAAP”), escrow agreements such as the one established by Mr. Li generally constitute compensation if, following attainment of a performance threshold, shares are returned to a company officer. The Company determined that without consideration of the compensation charge, the performance thresholds for the year ended September 30, 2005 would be achieved. However, after consideration of a related compensation charge, the Company determined that such thresholds would not have been achieved. The Company also determined that, even without consideration of a compensation charge, the performance thresholds for the year ended September 30, 2006 would not be achieved.

While the 217,955 escrow shares relating to the 2005 performance threshold were previously released to Mr. Li, Mr. Li executed a further undertaking on August 21, 2006 to return those shares to the escrow agent for the distribution to the relevant investors. However, such shares were not returned to the escrow agent, but, pursuant to a Delivery of Make Good Shares, Settlement and Release Agreement between the Company, BAK International and Mr. Li entered into on October 22, 2007 (the “Li Settlement Agreement”), such shares were ultimately delivered to the Company as described below. Because the Company failed to satisfy the performance threshold for the fiscal year ended September 30, 2006, the remaining 217,955 escrow shares relating to the fiscal year 2006 performance threshold were released to the relevant investors. As Mr. Li has not retained any of the shares placed into escrow, and as the investors party to the Escrow Agreement are only shareholders of the Company and do not have and are not expected to have any other relationship to the Company, the Company has not recorded a compensation charge for the years ended September 30, 2005 and 2006.

At the time the escrow shares relating to the 2006 performance threshold were transferred to the investors in fiscal year 2007, the Company should have recognized a credit to donated shares and a debit to additional paid-in capital, both of which are elements of shareholders’ equity. This entry is not material because total ordinary shares issued and outstanding, total shareholders’ equity and total assets do not change; nor is there any impact on income or earnings per share. Therefore, previously filed consolidated financial statements for the fiscal year ended September 30, 2007 will not be restated. This share transfer has been reflected in these financial statements by reclassifying the balances of certain items as of October 1, 2007. The balances of donated shares and additional paid-in capital as of October 1, 2007 were credited and debited by $7,955,358 respectively, as set out in the consolidated statements of changes in shareholders’ equity.

In November 2007, Mr. Li delivered the 217,955 shares related to the 2005 performance threshold to BAK International pursuant to the Li Settlement Agreement; BAK International in turn delivered the shares to the Company. Such shares (other than those issued to investors pursuant to the 2008 Settlement Agreements, as described below) are now held by the Company. Upon receipt of these shares, the Company and BAK International released all claims and causes of action against Mr. Li regarding the shares, and Mr. Li released all claims and causes of action against the Company and BAK International regarding the shares. Under the terms of the Li Settlement Agreement, the Company commenced negotiations with the investors who participated in the Company’s January 2005 private placement in order to achieve a complete settlement of BAK International’s obligations (and the Company’s obligations to the extent it has any) under the applicable agreements with such investors.

Beginning on March 13, 2008, the Company entered into settlement agreements (the “2008 Settlement Agreements”) with certain investors in the January 2005 private placement. Since the other investors have never submitted any claims regarding this matter, the Company did not reach any settlement with them.

Pursuant to the 2008 Settlement Agreements, the Company and the settling investors have agreed, without any admission of liability, to a settlement and mutual release from all claims relating to the January 2005 private placement, including all claims relating to the escrow shares related to the 2005 performance threshold that had been placed into escrow by Mr. Li, as well as all claims, including claims for liquidated damages relating to registration rights granted in connection with the January 2005 private placement. Under the 2008 Settlement Agreement, the Company has made settlement payments to each of the settling investors of the number of shares of the Company’s common stock equivalent to 50% of the number of the escrow shares related to the 2005 performance threshold these investors had claimed; aggregate settlement payments as of June 30, 2015amounted to 73,749 shares. Share payments to date have been made in reliance upon the exemptions from registration provided by Section 4(2) and/or other applicable provisions of the Securities Act of 1933, as amended. In accordance with the 2008 Settlement Agreements, the Company filed a registration statement covering the resale of such shares which was declared effective by the SEC on June 26, 2008.

Pursuant to the Li Settlement Agreement, the 2008 Settlement Agreements and upon the release of the 217,955 escrow shares relating to the fiscal year 2006 performance threshold to the relevant investors, neither Mr. Li or the Company have any obligations to the investors who participated in the Company’s January 2005 private placement relating to the escrow shares.

As of March 31, 2026, the Company had not received any claim from the other investors who have not been covered by the “2008 Settlement Agreements” in the January 2005 private placement.

As the Company has transferred the 217,955 shares related to the 2006 performance threshold to the relevant investors in fiscal year 2007 and the Company also have transferred 73,749 shares relating to the 2005 performance threshold to the investors who had entered the “2008 Settlement Agreements” with us in fiscal year 2008, pursuant to “Li Settlement Agreement” and “2008 Settlement Agreements”, neither Mr. Li nor the Company had any remaining obligations to those related investors who participated in the Company’s January 2005 private placement relating to the escrow shares.

On August 14, 2013, Dalian BAK Trading Co., Ltd was established as a wholly owned subsidiary of China BAK Asia Holding Limited (“BAK Asia”) with a registered capital of $500,000. Pursuant to CBAK Trading’s articles of association and relevant PRC regulations, BAK Asia was required to contribute the capital to CBAK Trading on or before August 14, 2015. On March 7, 2017, the name of Dalian BAK Trading Co., Ltd was changed to Dalian CBAK Trading Co., Ltd (“CBAK Trading”). On August 5, 2019, CBAK Trading’s registered capital was increased to $5,000,000. Pursuant to CBAK Trading’s amendment articles of association and relevant PRC regulations, BAK Asia was required to contribute the capital to CBAK Trading on or before August 1, 2033. On December 12, 2023, CBAK Trading changed its name to Dalian CBAK New Energy Co., Ltd (“CBAK New Energy”). The Company has contributed $2,435,000 to CBAK New Energy in cash as of March 31, 2026. CBAK New Energy principally engaged in investment holding.

On December 27, 2013, Dalian BAK Power Battery Co., Ltd was established as a wholly owned subsidiary of BAK Asia with a registered capital of $30,000,000. Pursuant to CBAK Power’s articles of association and relevant PRC regulations, BAK Asia was required to contribute the capital to CBAK Power on or before December 27, 2015. On March 7, 2017, the name of Dalian BAK Power Battery Co., Ltd was changed to Dalian CBAK Power Battery Co., Ltd (“CBAK Power”). On July 10, 2018, CBAK Power’s registered capital was increased to $50,000,000. On October 29, 2019, CBAK Power’s registered capital was further increased to $60,000,000. Pursuant to CBAK Power’s amendment articles of association and relevant PRC regulations, BAK Asia was required to contribute the capital to CBAK Power on or before December 31, 2021. The Company has made full contribution to CBAK Power through injection of a series of patents and cash. CBAK Power principal engaged in development and manufacture of high-power lithium batteries.

On May 4, 2018, CBAK New Energy (Suzhou) Co., Ltd (“CBAK Suzhou”) was established as a 90% owned subsidiary of CBAK Power with a registered capital of RMB10,000,000 (approximately $1.5 million). The remaining 10% equity interest was held by certain employees of CBAK Suzhou. Pursuant to CBAK Suzhou’s articles of association, each shareholder is entitled to the right of the profit distribution or responsible for the loss according to its proportion to the capital contribution. Pursuant to CBAK Suzhou’s articles of association and relevant PRC regulations, CBAK Power was required to contribute the capital to CBAK Suzhou on or before December 31, 2019. Up to the date of this report, the Company has contributed RMB9.0 million (approximately $1.3 million), and the other shareholders have contributed RMB1.0 million (approximately $0.1 million) to CBAK Suzhou through injection of a series of cash. In April 14, 2023, CBAK Power and Nanjing BFD Energy Technology Co., Ltd (“Nanjing BFD”) entered into shares transfer agreement to transfer the 90% shares of CBAK Suzhou owned by CBAK Power to Nanjing BFD, no gain or loss was incurred for the transfer. CBAK Suzhou is dormant as of March 31, 2026 and under the dissolve process.

On November 21, 2019, Dalian CBAK Energy Technology Co., Ltd (“CBAK Energy”) was established as a wholly owned subsidiary of BAK Asia with a registered capital of $50,000,000. Pursuant to CBAK Energy’s articles of association and relevant PRC regulations, BAK Asia was required to contribute the capital to CBAK Energy on or before November 20, 2022, the Company has extended the paid up time to January 31, 2054. The Company has contributed $23,519,880 to CBAK Energy as of March 31, 2026. CBAK Energy is dormant as of the date of the report.

On July 14, 2020, the Company acquired BAK Asia Investments Limited (“BAK Investments”), a company incorporated under Hong Kong laws, from Mr. Xiangqian Li, the Company’s former CEO, for a cash consideration of HK$1.00. BAK Asia Investments Limited is a holding company without any other business operations. BAK Investments principally engaged in investment holding.

On July 31, 2020, BAK Investments formed a wholly owned subsidiary CBAK New Energy (Nanjing) Co., Ltd. (“CBAK Nanjing”) in China with a registered capital of $100 million. Pursuant to CBAK Nanjing’s articles of association and relevant PRC regulations, BAK Investments was required to contribute the capital to CBAK Nanjing on or before July 29, 2040. The Company has contributed $55,289,915 to CBAK Nanjing as of March 31, 2026. CBAK Nanjing principally engaged in investment holding.

On August 6, 2020, Nanjing CBAK New Energy Technology Co., Ltd. (“Nanjing CBAK”) was established as a wholly owned subsidiary of CBAK Nanjing with a registered capital of RMB700 million (approximately $101.3 million). Pursuant to Nanjing CBAK’s articles of association and relevant PRC regulations, CBAK Nanjing was required to contribute the capital to Nanjing CBAK on or before August 5, 2040. The Company has contributed RMB352.5 million (approximately $51.0 million) to Nanjing CBAK as of March 31, 2026. Nanjing CBAK principally engaged in development and manufacture of larger-sized cylindrical lithium batteries.

On November 9, 2020, Nanjing Daxin New Energy Automobile Industry Co., Ltd (“Nanjing Daxin”) was established as a wholly owned subsidiary of CBAK Nanjing with a register capital of RMB50 million (approximately $7.2 million). Up to the date of this report, the Company has contributed RMB37 million (approximately $5.4 million) to Nanjing Daxin. On March 6, 2023, Nanjing Daxin changed its name to Nanjing BFD Energy Technology Co., Ltd (“Nanjing BFD”). The Company has paid in full to Nanjing BFD through injection of a series of cash. Nanjing BFD principally engaged in development and manufacture of sodium-ion batteries and dedicated batteries pack integration operations.

On April 21, 2021, CBAK Power, along with Shenzhen BAK Power Battery Co., Ltd (“BAK SZ”), Shenzhen Asian Plastics Technology Co., Ltd (“SZ Asian Plastics”) and Xiaoxia Liu, entered into an investment agreement with Junxiu Li, Hunan Xintao New Energy Technology Partnership, Xingyu Zhu, and Jiangsu Saideli Pharmaceutical Machinery Manufacturing Co., Ltd for an investment in Hunan DJY Technology Co., Ltd (“DJY”). CBAK Power has paid approximately $1.3 million (RMB9 million) to acquire 9.74% of the equity interests of DJY. CBAK Power has appointed one director to the Board of Directors of DJY. DJY engaged in researching and manufacturing of raw materials and equipment.

On July 20, 2021, CBAK Power entered into a framework agreement relating to CBAK Power’s investment in Zhejiang Hitrans Lithium Battery Technology Co., Ltd (“Hitrans”, formerly known as Zhejiang Meidu Hitrans Lithium Battery Technology Co., Ltd), pursuant to which CBAK Power agreed to acquire 81.56% of registered equity interests (representing 75.57% of paid-up capital) of Hitrans (the “Acquisition”). The Acquisition was completed on November 26, 2021 (Note 11). After the completion of the Acquisition, Hitrans became an 81.56% registered equity interests (representing 75.57% of paid-up capital) owned subsidiary of the Company.

On July 8, 2022, Hitrans held its second shareholder meeting in 2022 to pass a resolution to increase the registered capital of Hitrans from RMB40 million to RMB44 million (approximately $6.4 million) and to accept an investment of RMB22 million (approximately $3.2 million) from Shaoxing Haiji Enterprise Management & Consulting Partnership (“Shaoxing Haiji”) and an investment of RMB18 million (approximately $2.6 million) from Mr. Haijun Wu (collectively “Management Shareholder”). Under the resolution, 10% of the investment injection (RMB4 million or $0.6 million) will be contributed towards Hitrans’s registered capital and the remaining 90% (RMB36 million or $5.2 million) will be treated as additional paid-in capital contribution of Hitrans. 25% of the investments from the Management Shareholder were required to be in place before August 15, 2022, 25% of the investments were required to be in place before December 31, 2022 and the 50% balance (RMB20 million) were required to be received June 30, 2024. As of December 31, 2025 and March 31, 2026, RMB10 million (approximately $1.4 million), representing 25% of the investments were received. Shaoxing Haiji and Mr. Haijun Wu are currently in negotiations with other shareholders of Hitrans to extend the payment due date for the remaining unpaid 25% and 50% of the Management Shareholder Investments to May 31, 2029.

On December 8, 2022, CBAK Power entered into equity interest transfer agreements with five individuals to dispose of an aggregate 6.82% of Hitrans equity interests for a total consideration of RMB30 million (approximately $4.3 million). The transaction was completed on December 30, 2022. CBAK Power’s equity interest in Hitrans was 67.33% (representing 69.12% of paid-up capital) after the disposal.

On March 26, 2024, CBAK New Energy entered into an agreement with CBAK Power to acquire the same 67.33% equity interest in Hitrans. The registration of this equity transfer with the local government was also completed on the same date. As a result of this transaction, CBAK New Energy has become the controlling shareholder of Hitrans, while CBAK Power no longer holds any equity interest in Hitrans. In November 2025, CBAK New Energy entered into an equity transfer agreement with New Era Group Zhejiang New Energy Materials Co., Ltd to acquire an additional 6.1364% equity interests in Hitrans for a total consideration of RMB21.1 million (approximately $2.9 million). Upon the completion of this transaction and as of March 31, 2026, CBAK New Energy’s equity interests in Hitrans was 73.46% (representing 79.64% of paid-up capital).

On July 28, 2021, Hitrans Holdings, was established as a wholly owned subsidiary of CBAK, under the laws of the Cayman Islands, formerly named as “CBAK Energy Technology, Inc.,” and was renamed as “Hitrans Holdings Co., Ltd.” (“Hitrans Holdings”) on February 29, 2024. Hitrans Holdings does not have any significant operations as of the date of this report.

On October 9, 2021, Shaoxing Haisheng International Trading Co., Ltd. (“Haisheng”) was established as a wholly owned subsidiary of Hitrans with a registered capital of RMB5 million (approximately $0.8 million). Pursuant to Haisheng’s articles of association and relevant PRC regulations, Hitrans was required to contribute the capital to Haisheng on or before May 31, 2025. Hitrans has made full contribution to Haisheng through injection of a series of cash. Haisheng principally engaged in the business of cathode materials trading.

On July 7, 2023, Hong Kong Nacell Holdings Company Limited was established as a wholly owned subsidiary of Hitrans Holdings, incorporated under the laws of Hong Kong, was renamed as “Hong Kong Hitrans Holdings Company Limited” (“Hong Kong Hitrans”) on March 22, 2024. Hong Kong Hitrans does not have any significant operations as of the date of this report.

On July 12, 2023, CBAK Energy Lithium Holdings was established as a wholly owned subsidiary of CBAK, incorporated under the laws of the Cayman Islands was renamed as “CBAK Energy Lithium Holdings Co. Ltd” on February 29, 2024. CBAK Energy Lithium Holdings does not have any significant operations as of the date of this report.

On July 25, 2023, CBAK New Energy (Shangqiu) Co., Ltd (“CBAK Shangqiu”) was established as a wholly owned subsidiary of CBAK Power with a registered capital of RMB50 million (approximately $6.9 million). Pursuant to CBAK Shangqiu’s articles of association and relevant PRC regulations, CBAK Power was required to contribute the capital to Shangqiu on or before July 24, 2043. CBAK Power has contributed RMB18.0 million (approximately $2.6 million) to Shangqiu as of March 31, 2026. CBAK Shangqiu principally engaged in manufacture and sales of lithium-ion batteries.

On February 26, 2024, CBAK Energy Investments Holdings (“CBAK Energy Investments”) was established as a wholly owned subsidiary of CBAK, under the laws of the Cayman Islands. CBAK Energy Investments does not have any significant operations as of the date of this report.

On October 29, 2024, Shenzhen CBAK Sodium Battery New Energy Co., Ltd (“CBAK Shenzhen”) was established as a wholly owned subsidiary of BAK Investments with a registered capital of $2 million. Pursuant to CBAK Shenzhen’s articles of association and relevant PRC regulations, BAK Investments was required to contribute the capital to CBAK Shenzhen on or before October 17, 2029. BAK Investments made nil contribution as of March 31, 2026.

On January 9, 2025, Anhui Yuanchuang New Energy Materials Co., Ltd.(“Yuanchuang”) was established as a wholly owned subsidiary of Hitrans with a registered capital of RMB50 million (approximately $6.8 million). Pursuant to its articles of association and relevant PRC regulations, Hitrans was required to contribute the capital on or before January 2, 2030. Hitrans has made full contribution to Yuanchuang. Yuanchuang is designated to engage in the business of manufacturing and marketing of Nickel Cobalt Manganese (“NCM”) cathode materials for application in NCM lithium-ion batteries.

On April 30, 2025, the Company established a subsidiary in Malaysia, CBAK ENERGY Lithium Battery Malaysia SDN. BHD. (“CBAK Malaysia”). CBAK Malaysia will focus on the manufacturing and sales of cylindrical lithium cells, targeting overseas markets outside of China. CBAK Malaysia does not have operations as of the date of this report.

CBAK Energy C.A. Inc. (“CBAK Energy California”) was incorporated on November 17, 2025 under the laws of the State of California, the United States as a wholly owned subsidiary of CBAK Energy Technology, Inc. CBAK Energy California does not have any significant operations as of the date of this report. CBAK Energy California was set up to develop the United States market.

Shaoxing Hailan New Materials Co., Ltd (“Hailan New Materials”) was established on February 9, 2026 as a wholly owned subsidiary of Hitrans with a registered capital of RMB44 million (approximately $6.4 million). Pursuant to its articles of association and relevant PRC regulations, Hitrans was required to contribute on or before February 8, 2031. Hitrans made nil contribution as of March 31, 2026. Shaoxing Hailan was set up for investment holding (note 30).

The Company’s condensed consolidated financial statements have been prepared under US GAAP.

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. This basis of accounting differs in certain material respects from that used for the preparation of the books of account of the Company and its subsidiaries, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liability established in the PRC or Hong Kong. The accompanying condensed consolidated financial statements reflect necessary adjustments not recorded in the books of account of the Company’s subsidiaries to present them in conformity with US GAAP.

On December 8, 2020, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company issued in a registered direct offering, an aggregate of 9,489,800 shares of common stock of the Company at a per share purchase price of $5.18, and warrants to purchase an aggregate of 3,795,920 shares of common stock of the Company at an exercise price of $6.46 per share exercisable for 36 months from the date of issuance, for gross proceeds of approximately $49.16 million, before deducting fees to the placement agent and other estimated offering expenses of $3.81 million payable by the Company. In addition, the placement agent for this transaction also received warrants (“Placement Agent Warrants”) for the purchase of up to 379,592 shares of the Company’s common stock at an exercise price of $6.475 per share exercisable for 36 months after 6 months from the issuance.

On February 8, 2021, the Company entered into another securities purchase agreement with the same investors, pursuant to which the Company 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, the Company 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. The Company 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 estimated offering expenses of $5.0 million payable by the Company. In addition, the placement agent for this transaction also received warrants (“Placement Agent Warrants”) for the purchase of up to 446,999 shares of the Company’s common stock at an exercise price of $9.204 per share exercisable for 36 months after 6 months from the issuance.

On May 10, 2021, the Company entered into that Amendment No. 1 to the Series B Warrant (the “Series B Warrant Amendment”) with each of the holders of the Company’s outstanding Series B warrants. Pursuant to the Series B Warrant Amendment, the term of the Series B warrants was extended from May 11, 2021 to August 31, 2021.

As of August 31, 2021, the Company had not received any notices from the investors to exercise Series B warrants. As of March 31, 2026, all of the warrants were expired.

On May 20, 2025, the Company authorized a stock repurchase program (the “Stock Repurchase Program”) under which the Company may repurchase up to $20 million of shares of its common stock. The Stock Repurchase Program will end on May 20, 2026. Repurchases under the Stock Repurchase Program may be made from time to time through open market purchases, privately negotiated transactions or such other manners as will comply with applicable laws and regulations. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, market conditions and other corporate liquidity requirements and priorities. The Stock Repurchase Program does not obligate the Company to purchase any particular number of shares and there is no guarantee as to the exact number of shares that will be repurchased by the Company. The Stock Repurchase Program may be suspended, modified or terminated by the Company at any time and for any reason, without prior notice. The Company completed the shares repurchase and the repurchased shares were retired on August 13, 2025. The total cost for the repurchase was $1.5 million, with an average share price of $1.14 per unit.

As of March 31, 2026, the Company had $45.0 million bank loans and approximately $330.8 million of other current liabilities.

The Company is currently expanding its product lines and manufacturing capacity in its Dalian, Nanjing, Zhejiang and Anhui plant which requires more funding to finance the expansion. The Company plans to raise additional funds through banks borrowings and equity financing in the future to meet its daily cash demands, if required.

Outbreaks of viruses or other health epidemics and outbreaks

The Company business has been and may continue to be adversely affected by the outbreak of a widespread health epidemic, such as COVID-19 avian flu or African swine flu. The Company’s manufacturing facilities in Dalian, Nanjing and Shaoxing did not produce at full capacity when restrictive measures were in force during 2022, which negatively affected our operational and financial results. China began to modify its zero-COVID policy at the end of 2022, and most of the travel restrictions and quarantine requirements were lifted in December 2022.

The extent of the impact of the outbreaks of viruses or other health epidemics that will continue to have on the Company’s business is highly uncertain and difficult to predict and quantify, as the actions that the Company, other businesses and governments may take to contain the spread of possible health epidemics and outbreak continue to evolve. Because of the significant uncertainties surrounding, the extent of the future business interruption and the related financial impact cannot be reasonably estimated at this time.

As of the date of issuance of the Company’s condensed financial statements, the extent to which the possible health epidemics and outbreaks may in the future materially impact the Company’s financial condition, liquidity or results of operations is uncertain. The Company is monitoring and assessing the evolving situation closely and evaluating its potential exposure.

Going Concern

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has a working capital deficiency, an accumulated deficit from recurring net losses and significant short-term debt obligations maturing in less than one year as of March 31, 2026. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s plan for continuing as a going concern includes improving its profitability and obtaining additional debt financing, loans from existing shareholders for additional funding to meet its operating needs. There can be no assurance that the Company will be successful in the plans described above or in attracting equity or alternative financing on acceptable terms, or at all. These condensed consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Revenue Recognition

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

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

Revenues from product sales are recorded net of reserves established for applicable discounts and allowances that are offered within contracts with the Company’s customers.

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

Contract liabilities

The Company’s contract liabilities consist of deferred revenue associated with batteries development, services contracts and deposits received from customers allocated to the performance obligations that are unsatisfied. Changes in contract liability balances were not materially impacted by business acquisition, change in estimate of transaction price or any other factors during any of the years presented. The table below presents the activity of the deferred batteries development and sales of batteries revenue during the three months ended March 31, 2025 and 2026, respectively:

	For the three months ended March 31,
	2025			2026
Balance at beginning of year	$	4,831,774		$	15,841,985
Development fees collected/ deposits received		2,723,692			-
Development and sales of batteries revenue recognized		(1,338,383	)		-
Exchange realignment		24,130			226,538
Balance at end of period	$	6,241,213		$	16,068,523

Recently Adopted Accounting Standards

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326), that provides a practical expedient in developing forecasts as part of estimating expected credit losses. The amendment permits the Company to elect a practical expedient that assumes that current conditions as of the balance sheet date do not change for the remaining life of the asset. The ASU is effective for annual and interim periods beginning after December 15, 2025. Early adoption is permitted and is effective on a prospective basis. The Company adopted ASU2023-09 beginning January 1, 2026. The adoption did not have material impact on the Company’s condensed consolidated financial statement presentations and disclosures.

Recently Issued But Not Yet Adopted Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses (DISE), which requires additional disclosure of the nature of expenses included in the income statement in response to longstanding requests from investors for more information about an entity’s expenses. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. The guidance will be effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on the Company’s condensed consolidated financial statement presentation and disclosures.

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging – Hedge Accounting Improvements (Topic 815), which amends certain aspects of the hedge accounting guidance to better align financial reporting with the economics of an entity’s risk management activities. The ASU is effective for annual and interim periods beginning after December 13, 2026. Early adoption is permitted and is effective on a prospective basis. The Company is currently evaluating the impact that the adoption of this guidance on the Company’s condensed consolidated financial statement presentations and disclosures.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, to improve generally accepted accounting principles by establishing authoritative guidance on the accounting for government grants received by business entities. The amendments establish the accounting for a government grant received by a business entity, including guidance for a grant related to an asset and to income. The guidance is effective for fiscal years beginning after December 15, 2028, with early adoption permitted, and it can be applied using (a) a modified prospective approach; (b) a modified retrospective approach or (c) a retrospective approach. The Company is currently evaluating the impact that the adoption of this guidance on the Company’s condensed consolidated financial statement presentations and disclosures.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements upon adoption.

2.	Pledged deposits

Pledged deposits as of December 31, 2025 and March 31, 2026 consisted of pledged deposits with banks for bills payable (note 13) and collateral for commodity contracts (note 19).

3.	Trade and Bills Receivable, net

Trade and bills receivable as of December 31, 2025 and March 31, 2026:

	December 31,			March 31,
	2025			2026
Trade receivable	$	28,884,493		$	34,365,447
Less: Allowance for credit losses		(1,062,148	)		(1,127,894	)
		27,822,345			33,237,553
Bills receivable		10,583,053			13,261,599
	$	38,405,398		$	46,499,152

Included in trade and bills receivables are retention receivables of $51,392 and $40,694 as of December 31, 2025 and March 31, 2026. Retention receivables are interest-free and recoverable either at the end of the retention period of three to five years since the sales of the EV batteries or 200,000 km since the sales of the motor vehicles (whichever comes first).

An analysis of the allowance for the credit losses are as follows:

Balance as at January 1, 2026	$	1,062,148
Current period provision, net		49,665
Foreign exchange adjustment		16,081
Balance as at March 31, 2026	$	1,127,894

4.	Inventories

Inventories as of December 31, 2025 and March 31, 2026 consisted of the following:

	December 31,		March 31,
	2025		2026
Raw materials	$	11,897,761	$	15,364,191
Work in progress		12,055,586		23,410,581
Finished goods		26,648,940		36,898,963
	$	50,602,287	$	75,673,735

During the three months ended March 31, 2025 and 2026 write-downs of obsolete inventories to lower of cost or net realizable value of $934,424 and $2,592,622, respectively, were charged to cost of revenues.

5.	Prepayments and Other Receivables

Prepayments and other receivables as of December 31, 2025 and March 31, 2026 consisted of the following:

	December 31,			March 31,
	2025			2026
VAT recoverable	$	10,495,495		$	10,413,659
Prepayments to suppliers		1,873,852			953,557
Deposits		120,779			110,398
Staff advances		191,657			401,856
Prepaid operating expenses		850,680			636,998
Interest receivable		124,101			172,163
Receivables from customers for non-operating agency-based service		1,529,183			3,768,099
Derivatives assets (note 19)		-			416,535
Other receivables		3,439			7,743
		15,189,186			16,881,008
Less: Allowance for credit losses		(18,271	)		(17,592	)
	$	15,170,915		$	16,863,416

An analysis of the allowance for credit losses are as follows:

Balance as at January 1, 2026	$	18,271
Current period provision, net		(848	)
Foreign exchange adjustment		169
Balance as at March 31, 2026	$	17,592

6.	Property, Plant and Equipment, net

Property, plant and equipment as of December 31, 2025 and March 31, 2026 consisted of the following:

	December 31, 2025			March 31, 2026
Buildings	$	89,341,079		$	90,526,337
Leasehold improvements		8,790,749			10,092,972
Machinery and equipment		144,739,898			155,981,969
Office equipment		2,529,257			2,643,593
Motor vehicles		868,261			892,295
		246,269,244			260,137,166
Impairment		(17,375,954	)		(17,218,817	)
Accumulated depreciation		(49,834,489	)		(54,697,005	)
Carrying amount	$	179,058,801		$	188,221,344

During the three months ended March 31, 2025 and 2026, the Company incurred depreciation expense of $2,068,756 and $3,480,831 respectively.

During the course of the Company’s strategic review of its operations, the Company assessed the recoverability of the carrying value of the Company’s property, plant and equipment. The impairment charge, if any, represented the excess of carrying amounts of the Company’s property, plant and equipment over the estimated discounted cash flows expected to be generated by the Company’s production facilities. The Company believes that there was no impairment during the three months ended March 31, 2025 and 2026.

7.	Construction in Progress

Construction in progress as of December 31, 2025 and March 31, 2026 consisted of the following:

	December 31,		March 31,
	2025		2026
Construction in progress	$	19,914,272	$	14,723,373
Prepayment for acquisition of property, plant and equipment		12,132,149		14,966,416
Carrying amount	$	32,046,421	$	29,689,789

Construction in progress as of December 31, 2025 and March 31, 2026 mainly comprised capital expenditures for the construction of the facilities and production lines of CBAK Power, Nanjing CBAK, Hitrans and Anhui.

For the three months ended March 31, 2025 and 2026, the Company capitalized interest of $91,289 and nil respectively, to the cost of construction in progress.

8.	Long-term investments, net

Long-term investments as of December 31, 2025 and March 31, 2026, consisted of the following:

	December 31, 2025		March 31, 2026
Investments in equity method investees	$	1,839,890	$	1,867,569
Investments in non-marketable equity		645,690		655,404
	$	2,485,580	$	2,522,973

The following is the carrying value of the long-term investments:

	December 31, 2025					March 31, 2026
	Carrying Amount		Economic Interest			Carrying Amount		Economic Interest
Investments in equity method investees
Zhejiang Shengyang Renewable Resources Technology Co., Ltd. (a)	$	1,839,890		26	%	$	1,867,569		26	%

Investments in non-marketable equity (b)
Hunan DJY Technology Co., Ltd	$	645,690				$	655,404

(a)	Investments in Zhejiang Shengyang Renewable Resources Technology Co., Ltd.

Balance as of January 1, 2025	$	1,625,793
Income from investment		145,097
Foreign exchange adjustment		69,000
Balance as of December 31, 2025	$	1,839,890
Income from investment		-
Foreign exchange adjustment		27,679
Balance as of March 31, 2026	$	1,867,569

In September 27, 2023, Hitrans, entered into an Equity Transfer Contract (the “Equity Transfer Contract”) with Mr. Shengyang Xu, pursuant to which Hitrans will initially acquire a 26% equity interest in Zhejiang Shengyang Renewable Resources Technology Co., Ltd. (“Zhejiang Shengyang”) from Mr. Xu, an individual who currently holds 97% of Zhejiang Shengyang, for a price of RMB28.6 million (approximately $3.9 million) (the “Initial Acquisition”). Hitrans shall pay the Initial Acquisition price in two (2) installments as follows: (i) 50% of the price due within five business days following the execution of the Equity Transfer Contract and satisfaction of other conditions precedent set forth in the same; and (ii) the remaining 50% of the price due within five business days following Mr. Xu successful transfer to Hitrans of the 26% equity interest in Zhejiang Shengyang. Within fifteen business days after Hitrans has paid 50% of the price, or RMB14.3 million, the parties shall complete the registration of equity change with the local governmental authorities. Zhejiang Shengyang is a material supplier of Hitrans since June 2020. On November 6, 2023, Hitrans completed the registration of 26% equity interest of Zhejiang Shengyang.

The Company recorded share of income of $55,125 and nil from the investment in Zhejiang Shengyang for the three months ended March 31, 2025 and 2026, respectively.

And within three months following the Initial Acquisition, Mr. Xu shall transfer an additional 44% equity interest in Zhejiang Shengyang to Hitrans at the same price per share as that of the Initial Acquisition (the “Follow-on Acquisition”). The parties shall enter into another agreement to detail the terms of the Follow-on Acquisition. As of the date of this report, the Follow-on Acquisition was not completed. The management team of Hitrans is currently in negotiations with Mr. Xu regarding a potential postponement of the payment and equity transfer.

(c)	Investments in non-marketable equity

	December 31, 2025			March 31, 2026
Cost	$	1,282,618		$	1,301,914
Impairment		(636,928	)		(646,510	)
Carrying amount	$	645,690		$	655,404

On April 21, 2021, CBAK Power, along with Shenzhen BAK Power Battery Co., Ltd (BAK SZ), Shenzhen Asian Plastics Technology Co., Ltd (SZ Asian Plastics) and Xiaoxia Liu (collectively the “Investors”), entered into an investment agreement with Junxiu Li, Hunan Xintao New Energy Technology Partnership, Xingyu Zhu, and Jiangsu Saideli Pharmaceutical Machinery Manufacturing Co., Ltd for an investment in Hunan DJY Technology Co., Ltd (“DJY”), a privately held company. CBAK Power has paid $1.40 million (RMB9 million) to acquire 9.74% of the equity interests of DJY. CBAK Power along with other three new investors has appointed one director on behalf of the Investors to the Board of Directors of DJY. DJY is unrelated third party of the Company engaging in in research and development, production and sales of products and services to lithium battery positive cathode materials producers, including the raw materials, fine ceramics, equipment and industrial engineering.

On November 28, 2022, Nanjing CBAK along with Shenzhen Education for Industry Investment Co., Ltd. and Wenyuan Liu, an individual investor, set up Nanjing CBAK Education For Industry Technology Co., Ltd (“CBAK Education”) with a registered capital of RMB5 million (approximately $0.7 million), in which each party holding 10%, 60% and 30% equity interests of CBAK Education, respectively. The investment is for training skillful workforce for Nanjing CBAK. CBAK Education commenced its operation in 2023, nil capital contribution was made by Nanjing CBAK as of the report date.

Non-marketable equity securities are investments in privately held companies without readily determinable market value. The Company measures investments in non-marketable equity securities without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring basis. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3. The Company adjusts the carrying value of non-marketable equity securities which have been remeasured during the period and recognize resulting gains or losses as a component of other operating income (expense), net. No impairment was recorded on the non-marketable equity securities for the three months ended March 31, 2025 and 2026.

Lease

(a)	Prepaid land use rights

	Prepaid land
	lease payments
Balance as of January 1, 2025	$	11,075,973
Addition for the year		1,099,537
Amortization charge for the year		(331,189	)
Foreign exchange adjustment		464,543
Balance as of December 31, 2025		12,308,864
Amortization charge for the period		(87,931	)
Foreign exchange adjustment		185,002
Balance as of March 31, 2026		12,405,935

In August 2014 and November 2021, the Company acquired land use rights to build a factory of the Company in Dalian and Zhejiang, PRC.

Yuanchuang acquired a land use right on May 13, 2025 to build a factory in Anhui, PRC for cathode materials manufacturing.

Lump sum payments were made upfront to acquire the leased land from the owners with lease periods of 36 to 50 years, and no ongoing payments will be made under the terms of these land leases.

Amortization expenses of the prepaid land use rights were $78,305 and $87,931 for the three months ended March 31, 2025 and 2026 respectively.

No impairment loss was made to the carrying amounts of the prepaid land use right for the three months ended March 31, 2025 and 2026.

(b)	Operating lease

On April 6, 2021, Nanjing CBAK entered into a lease agreement for warehouse space in Nanjing with a three year term, commencing on April 15, 2021 and expiring on April 14, 2024. The monthly rental payment is approximately RMB97,743 ($14,146) per month. The lease was renewed for one year with a monthly rental of RMB86,913 (approximately $11,907) to May 14, 2025 and further extend for three years with a monthly rental of RMB94,156 (approximately $12,983) from May 14, 2025 to May 14, 2028.

On June 1, 2021, Hitrans entered into a lease agreement with liquid gas supplier for a five year term for supplying liquid nitrogen and oxygen, commencing on July 1, 2021. The monthly rental payment is approximately RMB5,310 ($773) per month.

On December 9, 2021, Hitrans entered into a lease agreement for extra staff quarters spaces in Zhejiang with a three year term, commencing on December 10, 2021 and expiring on December 9, 2024. The monthly rental payment is approximately RMB10,400 ($1,514) per month for the first year, RMB10,608 ($1,544) and RMB 10,820 ($1,575) per month from the second year and third year, respectively.

On March 1, 2022, Hitrans entered into a lease agreement for extra staff quarters spaces in Zhejiang with a five year term, commencing on March 1, 2022 and expiring on February 28, 2027. The monthly rental payment is approximately RMB15,840 ($2,306) per month for the first year, with 2% increase per year.

On October 20, 2022, CBAK Power entered into a lease agreement for staff quarters spaces in Dalian with a three year term, commencing on October 20, 2022 and expiring on October 19, 2025. The monthly rental payment is RMB61,905 ($9,012) per month.

On December 20, 2022, Hitrans entered into a lease agreement for extra staff quarters spaces in Zhejiang with a five year term commencing on December 20, 2022 and expiring on December 19, 2027. The monthly rental payment is RMB52,000 ($7,570) per month for the first year, with 2% increase per year.

On April 20, 2023, Hitrans entered into another lease agreement for extra staff quarters spaces in Zhejiang with a three year term commencing on May 1, 2023 and expiring on April 30, 2026. The monthly rental payment is RMB28,000 ($3,860) per month. On July 1, 2024, Hitrans entered into an amendment to early terminate the lease and entered into a new lease for a period of two years from July 1, 2024 to June 30, 2026. The monthly rental payment is RMB14,000 ($1,995) per month.

Nanjing CBAK entered into a lease agreement for office and factory spaces in Nanjing for a period of one year, commencing on August 1, 2023 and expiring on July 31, 2024. The monthly rental payment is approximately RMB160,743 ($22,649) per month. The lease was renewed for three years to August 31, 2027 with the same monthly rental.

CBAK Shangqiu entered into a lease agreement for staff quarters spaces in Shangqiu with a six-year term commencing on October 1, 2023 and expiring on September 30, 2029. The monthly rental payment is approximately RMB11,400 ($1,584) per month. On January 1, 2025, CBAK Shangqiu entered into an amendment to reduce the leased space and shorten the lease term to December 31, 2025. The new monthly rental is RMB7,717 ($1,003) per month.

CBAK Shangqiu entered into a lease agreement for manufacturing and factory spaces in Shangqiu with a term of six years, commencing on January 1, 2024 to December 31, 2029. The monthly rental payment is RMB265,487 ($36,769) per month. The landlord unconditionally forgave the accrued annual rent due to unsatisfied performance from the leasing spaces. The Company recognized the forgiveness as gains in 2025.

On March 1, 2024, Hitrans entered into a lease agreement with liquid gas supplier for forty-five months for supplying liquid nitrogen until December 11, 2027. The monthly rental payment is approximately RMB19,309 ($2,674) per month.

On April 26, 2024, Hitrans entered into a lease agreement with liquid gas supplier for a five-year term for supplying liquid argon to April 25, 2029. The monthly rental payment is approximately RMB1,062 ($146) per month.

Nanjing CBAK entered into a lease agreement for staff quarters spaces in Nanjing from March 1, 2024 to February 28, 2026. The monthly rental is RMB22,155 ($3,081) per month. On March 1, 2025, the month rental was reduced to RMB19,936 ($2,740) per month.

CBAK Shangqiu entered into a lease agreement for staff quarters spaces in Shangqiu from May 16, 2024 to December 31, 2029 for a quarter rental of RMB19,404 ($2,765).

Nanjing CBAK entered into another lease for staff quarters spaces in Nanjing from June 1, 2024 to May 31, 2025. The monthly rental payment is RMB39,633 ($5,511) per month.

BAK Asia entered into a lease for office in Hong Kong from June 16, 2025 to June 30, 2028. The monthly rental payment was HKD10,000 ($1,290) per month.

CBAK Energy California entered into a lease for office in California from January 1, 2026 to January 31, 2028. The monthly rental was $2,716 for the first calendar year and will be $2,798 from the second year.

Operating lease expenses for the three months ended March 31, 2025 and 2026 for the capitation agreement was as follows:

		March 31, 2025				March 31, 2026
Operating lease cost – straight line		$	308,290			$	321,463

(c)	Company as lessee - Finance lease

	December 31,			March 31,
	2025			2026
Property, plant and equipment, at cost	$	4,924,746		$	6,988,614
Accumulated depreciation		(2,569,405	)		(2,975,677	)
Impairment		(2,355,341	)		(4,012,937	)
Property, plant and equipment, net under finance lease		-			-

Finance lease liabilities, current		1,307,170			2,124,717
Finance lease liabilities, non-current		-			97,281
Total finance lease liabilities	$	1,307,170		$	2,221,998

The components of finance lease expenses for the three months ended March 31, 2025 and 2026 were as follows:

	For the three months ended March 31,
	2025		2026
Finance lease cost:
Depreciation of assets	$	-	$	-
Interest of lease liabilities		-		7,917
Total lease expenses	$	-	$	7,917

The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2026:

	Operating leases			Finance leases
Remainder of 2026	$	1,210,390		$	1,848,718
2027		951,285			389,610
2028		569,173			-
2029		471,140			-
2030		460,854			-
Thereafter		-			-
Total undiscounted cash flows		3,662,842			2,238,328
Less: imputed interest		(255,007	)		(16,330	)
Present value of lease liabilities	$	3,407,835		$	2,221,998

Lease term and discount rate:

	December 31, 2025			March 31, 2026
Weighted-average remaining lease term (years)
Land use rights		36.3			36.0
Operating leases		3.13			2.90
Finance lease		0.92			0.85

Weighted-average discount rate
Land use rights		Nil			Nil
Operating lease		4.19	%		4.30	%
Finance lease		0.8	%		0.98	%

Supplemental cash flow information related to leases where the Company was the lessee for the three months ended March 31, 2025 and 2026 was as follows:

	For the three months ended March 31,
	2025		2026
Operating cash outflows from operating assets	$	137,184	$	212,219

10.

Intangible Assets, net

Intangible assets as of December 31, 2025 and March 31, 2026 consisted of the followings:

	December 31, 2025			March 31, 2026
Computer software at cost	$	175,861		$	178,506
Sewage discharge permit		1,735,057			1,761,160
		1,910,918			1,939,666
Accumulated amortization		(1,839,264	)		(1,871,357	)
	$	71,654		$	68,309

Amortization expenses were $116,117 and $4,413 for the three months ended March 31, 2025 and 2026, respectively.

Total future amortization expenses for finite-lived intangible assets were estimated as follows:

Remainder of 2026	$	12,673
2027		10,996
2028		9,355
2029		8,941
2030		8,941
Thereafter		17,403
Total	$	68,309

No impairment loss was made to the carrying amounts of the intangible assets for the three months ended March 31, 2025 and 2026.

11.

Acquisition of subsidiaries

On July 20, 2021, CBAK Power entered into a framework agreement relating to CBAK Power’s investment in Hitrans, pursuant to which CBAK Power acquires 81.56% of registered equity interests (or representing 75.57% of paid-up capital) of Hitrans (the “Acquisition Agreement”). The transfer of 81.56% registered equity interests (representing 75.57% of paid-up capital) of Zhejiang Hitrans to CBAK Power has been registered with the local government and acquisition was completed on November 26, 2021.

Upon the closing of the Acquisition, CBAK Power became the largest shareholder of Hitrans holding 81.56% of the Company’s registered equity interests (representing 75.57% of paid-up capital of the Company). As required by applicable Chinese laws, CBAK Power and Management Shareholders are obliged to make capital contributions of RMB11.1 million ($1.7 million) and RMB0.4 million ($0.06 million), respectively, for the unpaid portion of Hitrans’s registered capital in accordance with the articles of association of Hitrans.

The Company completed the valuations necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed, resulting from which the amount of goodwill was determined and recognized as of the respective acquisition date. The following table summarizes the estimated aggregate fair values of the assets acquired and liabilities assumed as of the closing date, November 26, 2021.

Cash and bank	$	7,323,654
Debts product		3,144
Trade and bills receivable, net		37,759,688
Inventories		13,616,922
Prepayments and other receivables		1,384,029
Income tax recoverable		47,138
Amount due from trustee		11,788,931
Property, plant and equipment, net		21,190,890
Construction in progress		2,502,757
Intangible assets, net		1,957,187
Prepaid land use rights, noncurrent		6,276,898
Leased assets, net		48,394
Deferred tax assets		1,715,998
Short term bank loan		(8,802,402	)
Other short term loans – CBAK Power		(20,597,522	)
Trade accounts and bills payable		(38,044,776	)
Accrued expenses and other payables		(7,439,338	)
Deferred government grants		(290,794	)
Land appreciation tax		(464,162	)
Deferred tax liabilities		(333,824	)
Net assets		29,642,812
Less: Waiver of dividend payable		1,250,181
Total net assets acquired		30,892,993
Non-controlling interest (24.43%)		(7,547,158	)
Goodwill		1,606,518
Total identifiable net assets	$	24,952,353

The components of the consideration transferred to effect the Acquisition are as follows:

	RMB		USD
Cash consideration for 60% registered equity interest (representing 54.39% of paid-up capital) of Hitrans from Meidu Graphene		118,000,000		18,547,918
Cash consideration for 21.56% registered equity interest (representing 21.18% of paid-up capital) of Hitrans from Hitrans management		40,744,376		6,404,435
Total Purchase Consideration		158,744,376		24,952,353

The transaction resulted in a purchase price allocation of $1,606,518 to goodwill, representing the financial, strategic and operational value of the transaction to the Company. Goodwill is attributed to the premium that the Company paid to obtain the value of the business of Hitrans and the synergies expected from the combined operations of Hitrans and the Company, the assembled workforce and their knowledge and experience in provision of raw materials used in manufacturing of lithium batteries. The total amount of the goodwill acquired is not deductible for tax purposes and was fully impaired as of December 31, 2023.

12.

Deposit paid for acquisition of long-term investments

Deposit paid for acquisition of long-term investments as of December 31, 2025 and March 31, 2026 consisted of the following:

	December 31,		March 31,
	2025		2026
Investments in non-marketable equity	$	16,503,014	$	16,751,291

On September 27, 2023, Nanjing CBAK New Energy Technology Co., Ltd. (“Nanjing CBAK”) entered into an Equity Transfer Agreement (the “Equity Transfer Agreement”) with Shenzhen BAK Battery Co., Ltd. (“SZ BAK”), under which SZ BAK shall sell a five percent (5%) equity interest in Shenzhen BAK Power Battery Co., Ltd. (“BAK SZ”) to Nanjing CBAK for a purchase price of RMB260 million (approximately $35.7 million) (the “Target Equity”). Pursuant to the terms of the Equity Transfer Agreement, Nanjing CBAK will pay the Target Equity in three (3) installments as follows: (i) RMB40 million (approximately $5.5 million) due prior to December 31, 2024; (ii) RMB90 million (approximately $12.4 million) due prior to September 30, 2024, and (iii) the remaining Target Equity balance of RMB130 million (approximately $17.8 million) due following SZ BAK’s successful transfer to Nanjing CBAK of the five percent (5%) equity interest in BAK SZ. Upon Nanjing CBAK having paid RMB130 million of the Target Equity, the parties shall work together to complete the registration of equity change with the local governmental authorities. The Equity Transfer Agreement may be terminated in writing through negotiation by all parties and the deposit paid was refundable on demand. The equity transfer process take longer than expected. Nanjing CBAK and SZ BAK have entered into supplemental agreement on March 7, 2025 to extend the transaction period. The Company has contributed RMB115.8 million (approximately $16.8 million) as of March 31, 2026 and up to the date of this report.

SZ BAK and BAK SZ were the Company’s former subsidiary up to June 30, 2014. Mr. Xiangqian Li, the Company’s former CEO, is the director of SZ BAK and BAK SZ.

The Company will measure the investments in BAK SZ as non-marketable equity securities without a readily determinable fair value using a measurement alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable price changes on a non-recurring basis upon the completion. The fair value of non-marketable equity securities that have been remeasured due to impairment are classified within Level 3.

13.

Trade and Bills Payable

Trade and bills payable as of December 31, 2025 and March 31, 2026 consisted of the followings:

	December 31,		March 31,
	2025		2026
Trade payable	$	60,046,427	$	86,325,946
Bills payable
– Bank acceptance bills		91,161,622		114,525,647
– Letter of credit		2,137,696		2,169,856
	$	153,345,745	$	203,021,449

All the bills payable are of trading nature and will mature within one year from the issue date.

The bills payable were secured by:

(i)

the Company’s pledged deposits (Note 2);

(ii)

$1.4 million and $6.7 million of the Company’s bills receivable as of December 31, 2025 and March 31, 2026 (Note 3).

(iii)

the Company’s buildings (Note 6) and prepaid land use rights (Note 9)

14.

Loans

Bank loans:

Bank borrowings as of December 31, 2025 and March 31, 2026 consisted of the followings:

	December 31,		March 31,
	2025		2026
Short-term bank borrowings	$	28,532,938	$	37,386,698
Long-term bank borrowings		4,118,628		7,652,360
	$	32,651,566	$	45,039,058

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 facility 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. On October 24, 2025, Hitrans and Bank of Communications renewed the facility to a maximum guarantee of loan amount to RMB162.0 million (approximately $23.1 million). Under the facility, Hitrans borrowed RMB155.2 million (approximately $22.4 million) as of March 31, 2026, bearing interest at 2.45% to 3.0% per annum expiring through April 2026 to March 2027.

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 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. Hitrans repaid the loan on December 30, 2025.

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 RMB52.9 million (approximately $7.7 million) as of March 31, 2026, bearing interest rate at 2.41% - 2.96% per annum expiring through June 2027 to September 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 $4.2 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 RMB29 million (approximately $4.2 million) as of March 31, 2026, bearing interest rate at 2.26% to 2.78% per annum, repayable through May 2026 to March 2027.

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. Hitrans repaid the factoring loan in February 2026.

Hitrans entered into another 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 November 28, 2025 to November 27, 2026, bearing interest of 3.1% per annum. Hitrans borrowed RMB10 million (approximately $1.4 million) on the same date. Hitrans borrowed another RMB9.3 million (approximately $1.3 million), bearing interest of 3.0% per annum for one year from March 5, 2026 to March 5, 2027.

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 HKD10 million (approximately $1.4 million) from the above facility, bearing interest at 2.65% per annum, repayable on August 14, 2026. CBAK Power early repaid the loan on November 14, 2025.

CBAK Power has borrowed a series of acceptance bills totaling RMB51.5 million (approximately $7.45 million) for various terms expiring through April to September 2026, which was secured by CBAK Power’s buildings and pledged deposit of RMB45.9 million (approximately $6.6 million) (note 2).

On July 30, 2025, Hitrans entered into a short-term loan agreement with Industrial Bank Co., Ltd for RMB10 million (approximately $1.5 million) for a period of one year from July 31, 2025 to July 30, 2026 bearing interest of 3% per annum. Hitrans borrowed RMB10 million (approximately $1.4 million) on July 31, 2025.

On August 13, 2025, CBAK Power obtained a banking facility from China Construction Bank for RMB78.0 million (approximately $11.3 million) for a period to August 13, 2035. On August 29, 2025, CBAK Power drawn RMB10 million (approximately $1.4 million) from the facility for a period of one year, bearing interest of 2.2% per annum, repayable on August 21, 2026. On February 11, 2026, CBAK Power drawn RMB15 million (approximately $2.2 million) from the facility for a period of one year, bearing interest of 2.2% per annum, repayable on February 11, 2027.

On December 17, 2025, Nanjing BFD entered into a short-term loan agreement with Bank of China Co., Limited for RMB10 million (approximately $1.4 million) from December 17, 2025 to December 16, 2026, bearing interest 2.30% per annum. The loan was guaranteed by CBAK Nanjing. Nanjing BFD borrowed RMB10 million (approximately $1.4 million) on the same date.

On March 27, 2026, Nanjing CBAK obtained a bank loan from Ningbo Bank Co., Ltd Nanjing Gaochun Branch for RMB10 million (approximately $1.4 million), for the period from March 27, 2026 to November 3, 2026, bearing interest of 3.0% per annum. The loan did not require any security or guarantee from Nanjing CBAK.

CBAK Power borrowed a series of acceptance bills from China Zheshang Bank Co., Ltd. Shenyang Branch totaling RMB60.3 million (approximately $8.7 million) for various terms expiring through April to September 2026, which was secured by CBAK Power’s pledged deposits of RMB32.8 million (approximately $4.8 million) (note 2), and CBAK Power’s pledged bills receivable of RMB11.2 million (approximately $1.6 million) (note 3).

Nanjing CBAK borrowed a series of acceptance bills from China Zheshang Bank Co., Ltd. Shenyang Branch totaling RMB69.5 million (approximately $10.1 million) for various terms expiring through April to August 2026, which was secured by Nanjing CBAK’s pledged deposit of RMB62.4 million (approximately $9.0 million) (note 2), and Nanjing CBAK’s pledged bills receivable of RMB7.4 million (approximately $1.1 million) (note 3).

Hitrans borrowed a series of acceptance bills from China Zheshang Bank Co., Ltd totaling RMB36.7 million (approximately $5.3 million) for various terms expiring through April to June 2026, which was secured by Hitrans’s pledged deposit of RMB36.7 million (approximately $5.3 million) (note 2).

Nanjing CBAK borrowed a series of acceptance bills from Bank of Nanjing totaling RMB89.0 million (approximately $12.9 million) for various terms expiring through April to September 2026, which was secured by Nanjing CBAK’s pledged deposit of RMB79.0 million (approximately $11.4 million) (note 2) and the balance guaranteed by 100% equity of CBAK Nanjing held by BAK Investment.

Nanjing CBAK borrowed a series of acceptance bills from Bank of Ningbo totaling RMB10.2 million (approximately $1.5 million) for various terms expiring in July 2026, which was secured by Nanjing CBAK’s pledged deposit of RMB10.2 million (approximately $1.5 million) (note 2).

Hitrans borrowed a series of acceptance bills from Bank of Communications Co., Ltd. Shangyu Branch totaling RMB67.9 million (approximately $9.8 million) expiring through May to August 2026, which was secured by Hitrans’s pledged deposit of RMB67.9 million (approximately $9.8 million) (note 2).

Hitrans borrowed a series of acceptance bills from Zhejiang Shangyu Rural Commercial Bank Co., Ltd totaling RMB80.0 million (approximately $11.6 million) expiring through May to September 2026, which was secured by Hitrans’s pledged deposit of RMB80.0 million (approximately $11.6 million) (note 2).

CBAK Power borrowed a series of acceptance bills from Industrial and Commercial Bank of China totaling RMB71.9 million (approximately $10.4 million) expiring through April to September 2026, which was secured by CBAK Power’s pledged deposit of RMB72.0 million (approximately $10.4 million) (note 2).

CBAK Power borrowed a series of acceptance bills from China Construction Bank Co., Ltd totaling RMB100.0 million (approximately $14.5 million) expiring through June to August 2026.

Hitrans borrowed a series of acceptance bills from Industrial Bank totaling RMB2.1 million (approximately $0.3 million) expiring in July 2026, which was secured by Hitrans’s pledged deposit of RMB2.1 million (approximately $0.3 million) (note 2).

Nanjing CBAK borrowed a series of acceptance bills from Agricultural Bank of China totaling RMB29.7 million (approximately $4.3 million) expiring through June to September 2026, which was secured by Nanjing CBAK’s pledged deposit of RMB9.7 million (approximately $1.4 million) (note 2) and the balance guaranteed by 100% equity in CBAK Naning held by BAK Investment.

Nanjing CBAK obtained serval letter of credit from Bank of Ningbo totaled RMB15.0 million (approximately $2.2 million) for settlement of materials purchase for a period of one year expiring through September to November 2026, which was secured by Nanjing CBAK’s pledged deposit of RMB15.0 million (approximately $2.2 million) (note 2).

Hitrans borrowed a series of acceptance bill from Bank of Ningbo of RMB20 million (approximately $2.9 million) expiring through June to August 2026, which was secured by Hitran’s bills receivables of RMB20 million (approximately $2.9 million) (note 3).

Haisheng borrowed a series of acceptance bills from China Zheshang Bank Co., Ltd totaling RMB57.3 million (approximately $8.3 million) for various terms expiring through July to September 2026, which was secured by Haisheng’s pledged deposit of RMB57.3 million (approximately $8.3 million) (note 2).

Hitrans borrowed a series of acceptance bills from China CITIC Bank Shaoxing Branch totaling RMB32 million (approximately $4.6 million) for various terms expiring through August to September 2026, which was secured by Hitrans’s pledged deposits of RMB32 million (approximately $4.6 million) (note 2).

Haisheng borrowed a series of acceptance bills from China CITIC Bank Shaoxing Branch totaling RMB13.9 million (approximately $2.0 million) for various terms expiring through July to September 2026, which was secured by Haisheng’s pledged deposits of RMB6.4 million (approximately $0.9 million) (note 2) and bills receivables of RMB7.5 million (approximately $1.1 million) (note 3).

The facilities were also secured by the Company’s assets with the following carrying amounts:

	December 31,		March 31,
	2025		2026
Pledged deposits (note 2)	$	67,376,113	$	88,130,092
Bills receivables (note 3)		1,449,358		6,690,322
Right-of-use assets (note 9a)		5,019,028		11,283,270
Buildings (note 6)		43,200,786		45,180,265
	$	117,045,285	$	151,283,949

As of March 31, 2026, the Company had $25.0 million unutilized committed banking facilities.

During the three months ended March 31, 2025 and 2026, interest of $246,501 and $252,420 were incurred on the Company’s bank borrowings, respectively.

Other short-term loans:

Other short-term loans as of December 31, 2025 and March 31, 2026 consisted of the following:

		December 31,		March 31,
	Note	2025		2026
Advance from related parties
– Mr. Xiangqian Li, the Company’s Former CEO	(a)	$	100,000	$	100,000
– Mr. Yunfei Li, the Company’s Former CEO	(b)		157,236		156,593
			257,236		256,593
Advances from unrelated third party
– Mr. Wenwu Yu	(c)		1,401		1,422
– Ms. Longqian Peng	(c)		7,262		7,371
– Suzhou Zhengyuanwei Needle Ce Co., Ltd	(d)		71,257		72,329
			79,920		81,122
		$	337,156	$	337,715

(a)	Advances from Mr. Xiangqian Li, the Company’s former CEO, was unsecured, non-interest bearing and repayable on demand.

(b)	Advances from Mr. Yunfei Li, the Company’s former CEO, was unsecured, non-interest bearing and repayable on demand.

(c)	Advances from unrelated third parties were unsecured, non-interest bearing and repayable on demand.

(d)	In 2019, the Company entered into a short term loan agreement with Suzhou Zhengyuanwei Needle Ce Co., Ltd, an unrelated party to loan RMB0.6 million (approximately $0.1 million), bearing annual interest rate of 12%. As of March 31, 2026, loan amount of RMB0.5 million ($72,329) remained outstanding.

During the three months ended March 31, 2025 and 2026, interest of $2,062 and nil were incurred on the Company’s borrowings from unrelated parties, respectively.

15.

Accrued Expenses and Other Payables

Accrued expenses and other payables as of December 31, 2025 and March 31, 2026 consisted of the following:

	December 31,		March 31,
	2025		2026
Construction costs payable	$	14,311,903	$	11,597,122
Equipment purchase payable		51,082,600		50,297,177
Liquidated damages*		1,210,119		1,210,119
Accrued staff costs		8,633,536		9,500,859
Customer deposits		12,816,577		18,471,053
Deferred revenue		15,841,985		16,068,523
Accrued expenses		3,161,542		3,714,389
Interest payables		82,157		83,242
Other tax payables		1,318,816		1,099,884
Dividend payable to non-controlling interest to Hitrans		1,271,109		1,290,232
Payables to suppliers for non-operating agency-based service		2,632,714		6,402,034
Derivatives liabilities (note 19)		728,423		2,287,144
Other payable		560,467		651,230
	$	113,651,948	$	122,673,008

On August 15, 2006, the SEC declared effective a post-effective amendment that the Company had filed on August 4, 2006, terminating the effectiveness of a resale registration statement on Form SB-2 that had been filed pursuant to a registration rights agreement with certain shareholders to register the resale of shares held by those shareholders. The Company subsequently filed Form S-1 for these shareholders. On December 8, 2006, the Company filed its Annual Report on Form 10-K for the year ended September 30, 2006 (the “2006 Form 10-K”). After the filing of the 2006 Form 10-K, the Company’s previously filed registration statement on Form S-1 was no longer available for resale by the selling shareholders whose shares were included in such Form S-1. Under the registration rights agreement, those selling shareholders became eligible for liquidated damages from the Company relating to the above two events totaling approximately $1,051,000. As of December 31, 2025 and March 31, 2026, no liquidated damages relating to both events have been paid.

On November 9, 2007, the Company completed a private placement for the gross proceeds to the Company of $13,650,000 by selling 3,500,000 shares of common stock at the price of $3.90 per share. Roth Capital Partners, LLC acted as the Company’s exclusive financial advisor and placement agent in connection with the private placement and received a cash fee of $819,000. The Company may have become liable for liquidated damages to certain shareholders whose shares were included in a resale registration statement on Form S-3 that the Company filed pursuant to a registration rights agreement that the Company entered into with such shareholders in November 2007. Under the registration rights agreement, among other things, if a registration statement filed pursuant thereto was not declared effective by the SEC by the 100th calendar day after the closing of the Company’s private placement on November 9, 2007, or the “Effectiveness Deadline”, then the Company would be liable to pay partial liquidated damages to each such investor of (a) 1.5% of the aggregate purchase price paid by such investor for the shares it purchased on the one month anniversary of the Effectiveness Deadline; (b) an additional 1.5% of the aggregate purchase price paid by such investor every thirtieth day thereafter (pro-rated for periods totaling less than thirty days) until the earliest of the effectiveness of the registration statement, the ten-month anniversary of the Effectiveness Deadline and the time that the Company is no longer required to keep such resale registration statement effective because either such shareholders have sold all of their shares or such shareholders may sell their shares pursuant to Rule 144 without volume limitations; and (c) 0.5% of the aggregate purchase price paid by such investor for the shares it purchased in the Company’s November 2007 private placement on each of the following dates: the ten-month anniversary of the Effectiveness Deadline and every thirtieth day thereafter (prorated for periods totaling less than thirty days), until the earlier of the effectiveness of the registration statement and the time that the Company no longer is required to keep such resale registration statement effective because either such shareholders have sold all of their shares or such shareholders may sell their shares pursuant to Rule 144 without volume limitations. Such liquidated damages would bear interest at the rate of 1% per month (prorated for partial months) until paid in full.

On December 21, 2007, pursuant to the registration rights agreement, the Company filed a registration statement on Form S-3, which was declared effective by the SEC on May 7, 2008. As a result, the Company estimated liquidated damages amounting to $561,174 for the November 2007 registration rights agreement. As of December 31, 2025 and March 31, 2026, the Company had settled the liquidated damages with all the investors and the remaining provision of approximately $159,000 was included in other payables and accruals.

16.

Balances and Transactions with Related Parties

The principal related parties with which the Company had transactions during the years presented are as follows:

Name of Entity or Individual		Relationship with the Company
New Era Group Zhejiang New Energy Materials Co., Ltd.		Shareholder of Company’s subsidiary
Shenzhen Bak New Material Technology Co., Ltd		Note a
Zhengzhou BAK Battery Co., Ltd (“Zhenghzhou BAK”)		Note b, d
Shenzhen BAK Battery Co., Ltd (“SZ BAK”)		Former subsidiary and refer to Note c, d
Shenzhen BAK Power Battery Co., Ltd (“BAK SZ”)		Former subsidiary and refer to Note c, d
Zhejiang Shengyang Renewable Resources Technology Co., Ltd. (“Zhejiang Shengyang”)		Note f
Fuzhou BAK Battery Co., Ltd (“Fuzhou Bak”)		Note e, g
Zhengzhou BAK Electronics Co., Ltd		Note e, h
Zhengzhou BAK New Energy Vehicle Co., Ltd		Note i
Shenzhen BAK Medical Technology Co., Ltd (“SZ BAK Medical”)		Note e, j

(a)	Ms. Xiuzhu Li, one of the major shareholders of CBAK effective from December 3, 2025, is the major shareholder of Shenzhen BAK New Material Technology Co., Ltd, holding 46.32% equity interest.

(b)	Mr. Xiangqian Li, the Company’s former CEO, is a director of Zhengzhou BAK and Zhengzhou BAK is a wholly owned subsidiary of BAK SZ.

(c)	Mr. Xiangqian Li, the Company’s former CEO, is a director of SZ BAK and BAK SZ. SZ BAK and BAK SZ were the former subsidiaries of the Company. SZ BAK has 29.14% equity interests in BAK SZ. Mr. Xiangqian Li is the major shareholder of SZ BAK, he owned 51% equity interest in SZ BAK.

(d)	An immediate family member of Ms. Xiuzhu Li has major interests and is the director of these entities.

(e)	An immediate family member of Ms. Xiuzhu Li has major interests in serval entities set forth in the above table.

(f)	Hitrans has 26% equity interest in Zhejiang Shengyang (note 10).

(g)	Zhengzhou BAK has 51% equity interest in Fuzhou BAK.

(h)	BAK SZ has 100% equity interests in Zhengzhou BAK Electronics Co., Ltd.

(j)	SZ BAK was the former shareholder of Zhengzhou BAK New Energy Vehicle Co., Ltd to April 10, 2023.

(j)	SZ BAK Medical is a wholly owned subsidiary of SZ BAK.

Related party transactions

The Company entered into the following significant related party transactions:

	For the three months ended March 31,
	2025		2026
Purchase of batteries from Zhengzhou BAK	$	4,132	$	5,292,077
Purchase (purchase return) of batteries from Fuzhou BAK		3,369		(152,143	)
Purchase of materials from Zhejiang Shengyang		2,055,686		538,894
Sub-contracting services provided by Fuzhou BAK		-		432,762
Purchase of materials from SZ BAK Medical		-		310,813
Sales of cathode raw materials to Zhengzhou BAK		1,150,068		8,139,436
Sales of cathode raw materials to BAK SZ		4,620		2,172
Sales of cathode raw materials to Zhengzhou BAK Electronics Co., Ltd		176,512		278,381
Sales of cathode raw materials to Zhengzhou BAK in relation to non-operating agency-based service		2,168,931		-
Sales of cathode raw materials to Zhengzhou BAK Electronics Co., Ltd in relation to non-operating agency-based service		125,680		-
Sales of cathode raw materials to BAK SZ in relation to non-operating agency-based service		4,748		-

Related party balances

Apart from the above, the Company recorded the following significant related party balances as of December 31, 2025 and March 31, 2026:

Receivables from former subsidiary

		December 31, 2025				March 31, 2026
Receivables from BAK SZ		$	4,389			$	2,459

Balance as of December 31, 2025 and March 31, 2026 represented trade receivable for sales of cathode raw materials to BAK SZ.

Other balances due from/ (to) related parties

	December 31, 2025		March 31, 2026
Trade receivable, net – Zhengzhou BAK (i)	$	4,836,152	$	8,468,034
Trade receivable, net – Zhengzhou BAK Electronics Co., Ltd. (i)	$	237,446	$	314,160
Trade payable, net – Zhengzhou BAK (ii)	$	4,453,603	$	7,189,235
Trade payable, net – Zhejiang Shengyang (iii)	$	1,136,860	$	823,876
Trade payable, net - Shenzhen BAK New Material Technology Co., Ltd (iii)	$	164,887	$	167,367
Trade payable, net – SZ BAK Medical (iii)	$	428,572	$	611,973
Deposit paid for acquisition of long-term investments – BAK SZ (note 12)	$	16,503,014	$	16,751,291
Dividend payable to non-controlling interest of Hitrans (note 15)	$	1,271,109	$	1,290,232

(i)	Representing trade receivable from sales of cathode raw materials.

(ii)	Representing trade payables on purchase of batteries.

(iii)

Representing trade payables on purchase of materials for manufacturing

Payables to a former subsidiary

Payables to a former subsidiary as of December 31, 2025 and March 31, 2026 consisted of the following:

	December 31,		March 31,
	2025		2026
Payables to BAK SZ	$	407,506	$	402,708

Balance as of December 31, 2025 and March 31, 2026 consisted of payables for purchase of inventories.

17.

Deferred Government Grants

Deferred government grants as of December 31, 2025 and March 31, 2026 consist of the following:

	December 31,			March 31,
	2025			2026
Total government grants	$	10,774,034		$	10,789,296
Less: Current portion		(578,606	)		(587,312	)
Non-current portion	$	10,195,428		$	10,201,984

Government grants that are received in advance are deferred and recognized in the consolidated statements of operations over the period necessary to match them with the costs that they are intended to compensate. Government grants in relation to the achievement of stages of research and development projects are recognized in the consolidated statements of operations when amounts have been received and all attached conditions have been met. Non-refundable grants received without any further obligations or conditions attached are recognized immediately in the consolidated statements of operations.

On October 17, 2014, the Company received a subsidy of RMB46,150,000 pursuant to an agreement with the Management Committee dated July 2, 2013 for costs of land use rights and to be used to construct the new manufacturing site in Dalian. Part of the facilities had been completed and was operated in July 2015 and the Company has initiated amortization on a straight-line basis over the estimated useful lives of the depreciable facilities constructed thereon.

On June 23, 2020, BAK Asia, the Company wholly-owned Hong Kong subsidiary, entered into a framework investment agreement with Jiangsu Gaochun Economic Development Zone Development Group Company (“Gaochun EDZ”), pursuant to which the Company intended to develop certain lithium battery projects that aim to have a production capacity of 8Gwh. Gaochun EDZ agreed to provide various support to facilitates the development and operation of the projects. Since 2020, the Company accumulatively received RMB61.0 million (approximately $8.7 million) subsidy from Gaochun EDZ and government to facilitate the construction works and equipment in Nanjing. The Company recognized RMB10 million ($1.6 million) as other income after moving the Company facilities to Nanjing in 2020. For the remaining subsidy, the Company has initiated amortization on a straight-line basis over the estimated useful lives of the depreciable facilities constructed thereon.

On December 12, 2024, Hitrans received RMB11.42 million ($1.6 million) from Development and Reform Bureau of Shangyu District, Shaoxing for the purpose to facilitate the development of new production line. Hitrans received additional RMB20.3 million ($2.8 million) on March 26, 2025 from Development and Reform Bureau of Shangyu District, Shaoxing for the same nature. The Company will recognize the subsidies as income or offsets them against the related expenditures when there are no present or future obligations for the subsidized projects.

Government grants were recognized in the consolidated statements of operations as follows:

	For the three months ended March 31,
	2025		2026
Cost of revenues	$	126,183	$	132,501
Research and development expenses		9,300		9,766
General and administrative expenses		4,062		4,265
Other income (expenses), net		143,963		1,044,683
	$	283,508	$	1,191,215

18.

Product Warranty Provisions

The Company maintains a policy of providing after sales support for certain of its new EV and LEV battery products introduced since October 1, 2015 by way of a warranty program. The limited cover covers a period of six to twenty four months for battery cells, a period of twelve to twenty seven months for battery modules for light electric vehicles (LEV) such as electric bicycles, and a period of three years to eight years (or 120,000 or 200,000 km if reached sooner) for battery modules for electric vehicles (EV). The Company accrues an estimate of its exposure to warranty claims based on both current and historical product sales data and warranty costs incurred. The Company assesses the adequacy of its recorded warranty liability at least annually and adjusts the amounts as necessary.

Warranty expense is recorded as a component of sales and marketing expenses. Accrued warranty activity consisted of the following:

	December 31, 2025			March 31, 2026
Balance at beginning of year	$	444,114		$	785,689
Warranty costs incurred		(54,579	)		(425,958	)
Provision for the year/ period		370,557			524,527
Foreign exchange adjustment		25,597			12,021
Balance at end of year/ period		785,689			896,279
Less: Current portion		(339,136	)		(482,978	)
Non-current portion	$	446,553		$	413,301

19.

Financial derivatives

The Company uses a variety of derivative financial instruments and physical contracts to manage its exposure to foreign currency and commodity price fluctuations.

Foreign currency forward and option contracts

The Company enters into non-designated hedges under the authoritative guidance for derivatives and hedging to manage the exposure of foreign exchange rate fluctuations. The Company adjusts its non-designated hedges quarterly. The nominal value of approximately $42.2 million and $53.2 million contracts with maturities of three to twelve months were held as of December 31, 2025 and March 31, 2026, respectively.

Commodity contracts

The Company entered into commodity contracts to manage the exposure of raw materials price fluctuations, resulting in recognized gain of nil and $197,849 for the three months ended March 31, 2025 and 2026, respectively. The change in fair value of the commodity contracts of nil and $416,276 were recorded in Derivatives assets as of December 31, 2025 and March 31, 2026, respectively.

As of March 31, 2026, the Company held $548,271 (note 2) cash collateral to secure commodity contracts with a total nominal value of approximately $3.7 million. The commodity contracts are set to mature within two to six months from March 31, 2026. The Company did not hold any outstanding commodity contracts as of December 31, 2025.

The fair value of the financial derivatives as of December 31, 2025 and March 31, 2026 were as follows:

	December 31, 2025		March 31, 2026
Derivatives not designed as hedging instruments
Derivatives assets – Commodity contracts, prepayments and other receivables (note 5)	$	-	$	416,535

Derivatives liabilities - Foreign exchange contracts, accrued expenses and other payables (note 15)	$	728,423	$	2,287,144

The gain (loss) related to the Company’s derivative instruments for the three months period ended March 31, 2025 and 2026 were as follows:

	For the three months ended March 31,
	2025		2026
Foreign currency forward and option contracts	$	-	$	(1,520,380	)
Commodity contract		-		614,125
		-		(906,255	)

Refer to note 22 for detailed disclosures regarding fair value measurements.

20.

Income Taxes, Deferred Tax Assets and Deferred Tax Liabilities

(a)

Income taxes in the consolidated statements of comprehensive loss(income)

The Company’s provision for income taxes expenses consisted of:

	For the three months ended March 31,
	2025		2026
PRC income tax	$		$
Current income tax expenses, net		-		7,426
Deferred income tax expenses		-		-
	$	-	$	7,426

United States Tax

CBAK is a Nevada corporation that is subject to U.S. federal tax and state tax. On December 31, 2017 the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal corporate income taxes on dividends from foreign subsidiaries; (4) providing modification to subpart F provisions and new taxes on certain foreign earnings such as Global Intangible Low-Taxed Income (GILTI). Except for the one-time transition tax, most of these provisions go into effect starting January 1, 2018.

The Global Intangible Low-taxed Income (GILTI) is a new provision introduced by the Tax Cuts and Jobs Act. U.S. shareholders, who are domestic corporations, of controlled foreign corporations (CFCs) are eligible for up to an 80% deemed paid foreign tax credit (FTC) and a 50% deduction of the current year inclusion with the full amount of the Section 78 gross-up subject to limitation. This new provision is effective for tax years of foreign corporations beginning after December 31, 2017. The Company has evaluated whether it has additional provision amount resulted by the GILTI inclusion on current earnings and profits of its foreign controlled corporations. The Company has made an accounting policy choice of treating taxes due on future U.S. inclusions in taxable amount related to GILTI as a current period expense when incurred. As of December 31, 2025 and March 31, 2026, the Company does not have any aggregated positive tested income; and as such, does not have additional provision amount recorded for GILTI tax.

CBAK Energy California is subject to US federal income tax at a statutory rate of 21% and California state franchise tax at a flat rate of 8.84%.

No provision for income taxes in the United States has been made as CBAK and CBAK Energy California had no taxable income for the three months ended March 31, 2025 and 2026.

Hong Kong Tax

The Company’s subsidiaries in Hong Kong are subject to Hong Kong profits tax rate of 16.5% and did not have any assessable profits arising in or derived from Hong Kong for the three months ended March 31, 2025 and 2026, accordingly no provision for Hong Kong profits tax was made in these periods.

PRC Tax

The CIT Law in China applies an income tax rate of 25% to all enterprises but grants preferential tax treatment to High-New Technology Enterprises. CBAK Power was regarded as a “High-new technology enterprise” pursuant to a certificate jointly issued by the relevant Dalian Government authorities. Under the preferential tax treatment, CBAK Power was entitled to enjoy a tax rate of 15% for the years from 2024 to 2026 provided that the qualifying conditions as a High-new technology enterprise were met. Hitrans was regarded as a “High-new technology enterprise” pursuant to a certificate jointly issued by the relevant Zhejiang Government authorities. Under the preferential tax treatment, Hitrans was entitled to enjoy a tax rate of 15% for the years from 2024 to 2026 provided that the qualifying conditions as a High-new technology enterprise were met. Nanjing CBAK was regarded as a “High-new technology enterprise” pursuant to a certificate jointly issued by the relevant Nanjing Government authorities. Under the preferential tax treatment, Nanjing CBAK and Nanjing BFD were entitled to enjoy a tax rate of 15% for the years from 2023 to 2025 provided that the qualifying conditions as a High-new technology enterprise were met.

Malaysia Tax

CBAK Malaysia is subject to income tax laws of Malaysia at the statutory rate of 24%. CBAK Malaysia was newly incorporated on April 30, 2025 and did not have any operations as of the date of this report. There was no assessable profits arising in or derived from Malaysia for the three months ended March 31, 2026.

A reconciliation of the provision for income taxes determined at the statutory income tax rate to the Company’s income taxes is as follows:

	For the three months ended March 31,
	2025			2026
Loss before income taxes	$	(2,050,982	)	$	(8,954,864	)
United States federal corporate income tax rate		21	%		21	%
Income tax expenses (credit) computed at United States statutory corporate income tax rate		(430,706	)		(1,880,521	)
Reconciling items:
Rate differential for PRC earnings		(55,525	)		(326,166	)
Tax effect of entity at preferential tax rate		35,016			751,259
Non-deductible (income) expenses		133,519			162,574
Share based payments		5,684			93
Utilization of tax loss		(593,482	)		(366,080	)
Valuation allowance on deferred tax assets		905,494			1,666,267
Decrease in opening deferred tax assets resulting from a decrease in applicable tax rate		-
Income tax expenses	$	-		$	7,426

(b)

Deferred tax assets and deferred tax liabilities

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of December 31, 2025 and March 31, 2026 are presented below:

	December 31, 2025			March 31, 2026
Deferred tax assets
Trade receivable	$	662,239			676,546
Inventories		927,350			654,451
Property, plant and equipment		1,868,073			1,706,650
Non-marketable equity securities		95,539			96,976
Equity method investment		335,398			340,444
Intangible assets		151,340			152,025
Accrued expenses, payroll and others		865,885			996,679
Provision for product warranty		117,854			137,622
Net operating loss carried forward		18,761,298			20,079,128
Valuation allowance		(23,659,551	)		(24,714,584	)
Deferred tax assets, non-current	$	125,425			125,937

Deferred tax liabilities, non-current
Long-lived assets arising from acquisitions	$	125,425		$	125,937

As of March 31, 2026, the Company’s U.S. entity had net operating loss carry forwards of $3,812,589. As of March 31, 2026, the Company’s PRC subsidiaries had net operating loss carry forwards of $71,013,718, which will expire in various years through 2025 to 2034. Management believes it is more likely than not that the Company will not realize these potential tax benefits as these operations will not generate any operating profits in the foreseeable future. As a result, a valuation allowance was provided against the full amount of the potential tax benefits.

According to the PRC Tax Administration and Collection Law, the statute of limitations is three years if the underpayment of taxes is due to computational errors made by the taxpayer or its withholding agent. The statute of limitations extends to five years under special circumstances, which are not clearly defined. In the case of a related party transaction, the statute of limitations is ten years. There is no statute of limitations in the case of tax evasion.

The impact of an uncertain income tax positions on the income tax return must be recognized at the largest amount that is more likely than not to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. Interest and penalties on income taxes will be classified as a component of the provisions for income taxes.

21.

Statutory reserves

As stipulated by the relevant laws and regulations in the PRC, company established in the PRC (the “PRC subsidiary”) is required to maintain a statutory reserve made out of profit for the year based on the PRC subsidiary’ statutory financial statements which are prepared in accordance with the accounting principles generally accepted in the PRC. The amount and allocation basis are decided by the director of the PRC subsidiary annually and is not to be less than 10% of the profit for the year of the PRC subsidiary. The aggregate amount allocated to the reserves will be limited to 50% of registered capital for certain subsidiaries. Statutory reserve can be used for expanding the capital base of the PRC subsidiary by means of capitalization issue.

In addition, as a result of the relevant PRC laws and regulations which impose restriction on distribution or transfer of assets out of the PRC statutory reserve, $3,042,602 representing the PRC statutory reserve of the subsidiary as of December 31, 2025 and March 31, 2026, are also considered under restriction for distribution.

22.

Fair Value of Financial Instruments

ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. Certain current assets and current liabilities are financial instruments. Management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and, if applicable, their current interest rates are equivalent to interest rates currently available. The three levels of valuation hierarchy are defined as follows:

●

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

●

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

●

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The fair value of commodity contracts was determined by quoted market prices in active markets within level 1 (Note 19).

The fair value of foreign currency option was determined using the Black-Scholes model, with level 2 inputs (Note 19).

The fair value of share options was determined using the Binomial Model, with level 3 inputs (Note 24).

The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, pledged deposits, trade accounts and bills receivable, other receivables, balances with former subsidiaries, notes payable, other short-term loans, short-term and long-term bank loans and other payables approximate their fair values because of the short maturity of these instruments or the rate of interest of these instruments approximate the market rate of interest.

23.

Employee Benefit Plan

Full time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. The Company accrues for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The total employee benefits expensed as incurred were $787,754 (RMB5,729,888) and $2,078,873 (RMB14,400,144) for the three months ended March 31, 2025 and 2026, respectively.

24.

Share-based Compensation

Restricted Shares and Restricted Share Units

Restricted shares granted on June 30, 2015

On June 12, 2015, the Board of Director approved the CBAK Energy Technology, Inc. 2015 Equity Incentive Plan (the “2015 Plan”) for Employees, Directors and Consultants of the Company and its Affiliates. The maximum aggregate number of Shares that may be issued under the Plan is ten million (10,000,000) Shares.

On June 30, 2015, pursuant to the 2015 Plan, the Compensation Committee of the Company’s Board of Directors granted an aggregate of 690,000 restricted shares of the Company’s common stock, par value $0.001, to certain employees, officers and directors of the Company with a fair value of $3.24 per share on June 30, 2015. In accordance with the vesting schedule of the grant, the restricted shares will vest in twelve equal quarterly installments on the last day of each fiscal quarter beginning on June 30, 2015 (i.e. last vesting period: quarter ended March 31, 2018). The Company recognizes the share-based compensation expenses on a graded-vesting method.

All the restricted shares granted in respect of the restricted shares granted on June 30, 2015 have been vested on March 31, 2018.

As of March 31, 2026, there was no unrecognized stock-based compensation associated with the above restricted shares. As of March 31, 2026, 1,667 vested shares were to be issued.

Restricted shares granted on April 19, 2016

On April 19, 2016, pursuant to the Company’s 2015 Plan, the Compensation Committee of the Board of Directors of the Company granted an aggregate of 500,000 restricted shares of the Company’s common stock, par value $0.001, to certain employees, officers and directors of the Company, of which 220,000 restricted shares were granted to the Company’s executive officers and directors. There are three types of vesting schedules. First, if the number of restricted shares granted is below 3,000, the shares will vest annually in 2 equal installments over a two-year period with the first vesting on June 30, 2017. Second, if the number of restricted shares granted is larger than or equal to 3,000 and is below 10,000, the shares will vest annually in 3 equal installments over a three year period with the first vesting on June 30, 2017. Third, if the number of restricted shares granted is above or equal to 10,000, the shares will vest semi-annually in 6 equal installments over a three year period with the first vesting on December 31, 2016. The fair value of these restricted shares was $2.68 per share on April 19, 2016. The Company recognizes the share-based compensation expenses over the vesting period (or the requisite service period) on a graded-vesting method.

All the restricted shares granted in respect of the restricted shares granted on April 16, 2016 had been vested on June 30, 2019.

As of March 31, 2026, there was no unrecognized stock-based compensation associated with the above restricted shares and 4,167 vested shares were to be issued.

Employees Stock Ownership Program on November 29, 2021

On November 29, 2021, pursuant to the Company’s 2015 Plan, the Compensation Committee granted options to obtain an aggregate of 2,750,002 share units of the Company’s common stock to certain employees, officers and directors of the Company, of which options to obtain 350,000 share units were given to the Company’s executive officers and directors with an option exercise price of $1.96 based on fair market value. The vesting of shares each year is subject to certain financial performance indicators. The shares will be vested semi-annually in 10 equal installments over a five year period with the first vesting on May 30, 2022. The options will expire on the 70-month anniversary of the grant date.

The fair value of the stock options granted to directors of the Company is estimated on the date of the grant using the Binomial Model. The fair value of the options was calculated using the following assumptions: estimated life of six months to five years, volatility of 106.41%, risk free interest rate of 1.26%, and dividend yield of 0%. The fair value of 350,000 stock options to directors of the Company was $479,599 at the grant date.

The fair value of the stock options granted to certain employees and officers of the Company is estimated on the date of the grant using the Binomial Model. The fair value of the options was calculated using the following assumptions: estimated life of six months to five years, volatility of 106.41%, risk-free interest rate of 1.26% and dividend yield of 0%. The fair value of 2,400,002 stock options to certain employees and officers of the Company was $2,805,624 at the grant date.

As of March 31, 2026, the granting period of the options were expired, there was no unrecognized stock-based compensation associated with the above options granted.

Restricted share units granted and stock ownership program on April 11, 2023

On April 11, 2023, pursuant to the Company’s 2015 Plan, the Compensation Committee granted an aggregate of 894,000 restricted share units and 2,124,000 options to certain employees, officers and directors of the Company, of which 230,000 restricted share units and 460,000 options were granted to the Company’s executive officers and directors. The restricted share units will vest semi-annually on June 30, 2023 and December 31, 2023. The fair value of these restricted shares units was $0.95 per share on April 11, 2023. The Company recognizes the share-based compensation expenses over the vesting period (or the requisite service period) on a graded-vesting method. The option exercise price was $0.9780. The shares will be vested semi-annually in 4 equal installments over a 2 year period with the first vesting on June 30, 2024. The options will expire on the 70-month anniversary of the grant date.

The fair value of the stock options granted to directors and certain employees and officers of the Company is estimated on the date of the grant using the Binomial Model. The fair value of the options was calculated using the following assumptions: estimate life of 5.83 years, volatility of 106.59%, risk free interest rate of 3.51% and dividend yield of 0%. The fair value of options of the Company was $838,190 at the grant date. The Company recorded $20,249 and nil as share-based compensation expenses in respect of the stock options granted on April 11, 2023 for the three months ended March 31, 2025 and 2026, respectively.

All the restricted share units granted on April 11, 2023 had been vested on December 31, 2024. There was no unrecognized stock-based compensation associated with the above option granted.

Restricted share units granted and stock ownership program on August 22, 2023

On August 22, 2023, pursuant to the Company’s 2015 Plan, the Compensation Committee granted an aggregate of 40,000 restricted share units and 160,000 options to employees of the Company. The restricted share units will vest semi-annually on October 15, 2023 and April 15, 2024. The fair value of these restricted shares units was $0.88 per share on August 22, 2023. The Company recognizes the share-based compensation expenses over the vesting period (or the requisite service period) on a graded-vesting method. The option exercise price was $0.8681. The shares will be vested semi-annually in 4 equal instalments over a two year period with the first vesting on February 15, 2025. The options will expire on the 70-month anniversary of the grant date.

The fair value of the stock options granted to directors and certain employees and officers of the Company is estimated on the date of the grant using the Binomial Model. The fair value of the options was calculated using the following assumptions: estimate life of 5.83 years, volatility of 106.34%, risk free interest rate of 4.47% and dividend yield of 0%. The fair value of options of the Company was $56,521 at the grant date. For the three months ended March 31, 2025 and 2026, the Company recorded $6,817 and $443, respectively, as share-based compensation expenses in respect of the stock options granted on August 22, 2023.

As of March 31, 2026, there was unrecognized stock-based compensation $1,565 associated with the above options granted.

Stock option activity under the Company’s stock-based compensation plans is shown below:

	Number of Shares		Average Exercise Price per Share		Aggregate Intrinsic Value*		Weighted Average Remaining Contractual Term in Years
Outstanding at January 1, 2026		80,000	$	0.96		-		0.6
Exercisable at January 1, 2026		2,066,458		1.24	$	-		2.5

Granted		-		-		-		-
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding at March 31, 2026		40,000	$	0.87	$	-		0.4
Exercisable at March 31, 2026		2,106,458	$	1.23	$	-		2.3

The intrinsic value of the stock options at March 31, 2026 is the amount by which the market value of the Company’s common stock of $0.83 as of March 31, 2026 exceeds the average exercise price of the option. As of March 31, 2026, the intrinsic value of the outstanding and exercisable stock options was nil.

As the Company itself is an investment holding company which is not expected to generate operating profits to realize the tax benefits arising from its net operating loss carried forward, no income tax benefits were recognized for such stock-based compensation cost under the stock option plan for the three months ended March 31, 2025 and 2026.

25.

Income (Loss) Per Share

Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares pertaining to warrants, stock options, and similar instruments had been issued and if the additional common shares were dilutive. Diluted earnings per share are based on the assumption that all dilutive convertible shares and stock options and warrants were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding unvested restricted stock, options and warrants, and the if-converted method for the outstanding convertible instruments. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later) and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, outstanding convertible instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).

The following is the calculation of income (loss) per share:

	For the three months ended March 31,
	2025			2026
Net loss	$	(2,050,982	)	$	(8,962,290	)
Less: Net loss (income) attributable to non-controlling interests		471,748			(325,082	)
Net loss income attributable to shareholders of CBAK Energy Technology, Inc.		(1,579,234	)		(9,287,372	)

Weighted average shares outstanding -basic (note)		89,938,690			89,247,119
Dilutive unvested shares unit		-			-
Weighted average shares outstanding–- diluted		89,938,690			89,247,119

Loss per share
- Basic	$	(0.02	)	$	(0.10	)
- Diluted	$	(0.02	)	$	(0.10	)

Note:

Including 5,384 vested restricted shares granted pursuant to the 2015 Plan that were not yet issued

For the three months ended March 31, 2025 and 2026, all the unvested options were anti-dilutive and excluded from shares used in the diluted computation.

26.

Commitments and Contingencies

(i)

Capital Commitments

As of December 31, 2025 and March 31, 2026, the Company had the following contracted capital commitments:

	December 31, 2025		March 31, 2026
For construction of buildings	$	733,869	$	744,910
For purchases of equipment		26,187,817		27,874,523
Capital injection		257,370,802		264,966,575
	$	284,292,488	$	293,586,008

(ii)

Litigation

During its normal course of business, the Company may become involved in various lawsuits and legal proceedings. However, litigation is subject to inherent uncertainties, and an adverse result may arise from time to time that could affect its operations. Other than the legal proceedings set forth below, the Company is currently not aware of any such legal proceedings or claims that the Company believes will have an adverse effect on the Company’s operations, financial condition or operating results.

In December 2020, CBAK Power received notice from Court of Dalian Economic and Technology Development Zone that Haoneng filed another lawsuit against CBAK Power for failure to pay pursuant to the terms of the purchase contract. Haoneng sought a total amount of $1.5 million (RMB10,257,030), including equipment cost of $1.3 million (RMB9,072,000) and interest amount of $0.2 million (RMB1,185,030). In August 2021, CBAK Power and Haoneng reached an agreement that the term of the purchase contract will be extended to December 31, 2024 under which CBAK Power and its related parties shall execute the purchase of equipment in an amount not lower than $2.4 million (RMB15,120,000) from Haoneng, or CBAK Power has to pay 15% of the amount equal to RMB 15,120,000 ($2.2 million) net of the purchased amount to Haoneng. Haoneng withdrew the filed lawsuit after the agreement. As of March 31, 2026, the equipment was not received by CBAK Power, CBAK Power has included the equipment cost of $2.2 million (RMB15,120,000) under capital commitments.

27.

Concentrations and Credit Risk

(a)

Concentrations

The Company had the following customers that individually comprised 10% or more of net revenue for the three months ended March 31, 2025 and 2026 as follows:

	Three months ended March 31,
Sales of finished goods and raw materials	2025				2026
Customer A	$	10,731,179	30.7	%		*	*
Zhenghzhou BAK (note 16)		*	*			8,139,436	11.7	%

*	Comprised less than 10% of net revenue for the respective period.

The Company had the following customers that individually comprised 10% or more of net trade receivable (included VAT) as of December 31, 2025 and March 31, 2026 as follows:

	December 31, 2025				Marh 31, 2026
Customer A	$	3,932,534	14.1	%	$	*	*
Zhengzhou BAK (note 16)		4,836,152	17.4	%		8,468,034	25.5	%

*	Comprised less than 10% of net accounts receivable for the respective period.

The Company had the following suppliers that individually comprised 10% or more of net purchase for the three months ended March 31, 2025 and 2026 as follows:

	Three months ended March 31,
	2025				2026
Supplier A	$	3,619,451	11.2	%	$	13,542,101	16.9	%
Supplier B		*	*			9,994,299	12.5	%

*	Comprised less than 10% of net purchase for the respective period.

The Company had the following suppliers that individually comprised 10% or more of trade payable as of December 31, 2025 and March 31, 2026 as follows:

	December 31, 2025				March 31, 2026
Supplier A	$	*	*		$	13,005,167	15.1	%
Supplier B		*	*			9,999,850	11.6	%
Supplier C		7,202,042	12.0	%		*	*

(b)

Credit Risk

Financial instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents and pledged deposits. As of December 31, 2025 and March 31, 2026 substantially all of the Company’s cash and cash equivalents were held by major financial institutions and online payment platforms located in the PRC, which management believes are of high credit quality. The Company has not experienced any losses on cash and cash equivalents to date. The Company does not require collateral or other securities to support financial instruments that are subject to credit risk.

For the credit risk related to trade accounts receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit losses.

28.

Segment Information

The Company’s chief operating decision maker has been identified as the Chief Executive Officer (“CEO”) who reviews financial information of operating segments based on US GAAP amounts when making decisions about allocating resources and assessing performance of the Company.

The Company determined that for the three months ended March 31, 2025 and 2026, it operated in two operating segments namely CBAK and Hitrans. CBAK’s segment mainly includes the manufacture, commercialization and distribution of a wide variety of standard and customized lithium-ion rechargeable batteries for use in a wide array of applications. Hitrans’ segment mainly includes the development and manufacturing of NCM precursor and cathode materials.

The Company primarily operates in the PRC and substantially all of the Company’s long-lived assets are located in the PRC.

The Company’s chief operating decision maker evaluates performance based on each reporting segment’s net revenue, cost of revenues, operating expenses, operating income (loss), finance income (expense), other income (expense) and net income (loss). Net revenue, cost of revenues, operating expenses, operating income (loss), finance income (expense), other income (expenses) and net income (loss) by segment for the three months ended March 31, 2025 and 2026 were as follows:

For the three months ended March 31, 2025	CBAT			Hitrans			Corporate unallocated (note)			Consolidated
Net revenues	$	20,363,338		$	14,575,563		$	-		$	34,938,901
Cost of revenues		(15,643,236	)		(14,493,931	)		-			(30,137,167	)
Gross profit		4,720,102			81,632			-			4,801,734
Total operating expenses		(4,829,636	)		(2,200,311	)		(635,806	)		(7,655,753	)
Operating income (loss)		(109,534	)		(2,118,679	)		(635,806	)		(2,864,019	)
Finance income (expenses), net		223,119			(178,000	)		1			45,120
Other income, net		223,276			544,641			-			767,917
Income tax expenses		-			-			-			-
Net income (loss)		336,861			(1,752,038	)		(635,805	)		(2,050,982	)

For the three months ended March 31, 2026	CBAT			Hitrans			Corporate unallocated (note)			Consolidated
Net revenues	$	37,519,841		$	32,098,151		$	-		$	69,617,992
Cost of revenues		(39,575,695	)		(29,002,429	)		-			(68,578,124	)
Gross (loss) profit		(2,055,854	)		3,095,722			-			1,039,868
Total operating expenses		(7,432,286	)		(2,530,647	)		(777,518	)		(10,740,451	)
Operating (loss) income		(9,488,140	)		565,075			(777,518	)		(9,700,583	)
Finance expenses, net		(267,520	)		(147,749	)		(826	)		(416,095	)
Other income, net		5,274			1,156,540			-			1,161,814
Income tax expenses		-			(7,426	)		-			(7,426	)
Net (loss) income		(9,750,386	)		1,566,440			(778,344	)		(8,962,290	)
As of March 31, 2026
Identifiable long-lived assets		178,291,548			54,927,212			86,744			233,305,504
Total assets		355,326,434			135,564,774			114,336			491,005,544

Note: The Company does not allocate its assets located and expenses incurred outside China to its reportable segments because these assets and activities are managed at a corporate level.

Net revenues by product:

The Company’s products can be categorized into high power lithium batteries and materials used in manufacturing of lithium batteries. For the product sales of high power lithium batteries, the Company manufactured high-power cylindrical lithium battery cell and battery packs. The Company’s battery products are sold to end users in electric vehicles, light electric vehicles and energy storage sectors. For the product sales of materials used in manufacturing of lithium batteries, the Company, via its subsidiary, Hitrans, manufactured cathode materials and Precursor for use in manufacturing of cathode. Revenue from these products is as follows:

	For the three months ended March 31,
	*2025*		*2026*
High power lithium batteries used in:
Electric vehicles	$	537,507	$	1,538
Light electric vehicles		2,844,874		15,407,700
Residential energy supply & uninterruptable supplies		16,980,957		22,110,603
		20,363,338		37,519,841
Materials used in manufacturing of lithium batteries
Cathode		11,261,199		32,076,278
Precursor		3,314,364		21,873
		14,575,563		32,098,151
Total consolidated revenue	$	34,938,901	$	69,617,992

Net revenues by geographic area:

The Company’s operations are located in the PRC. The following table provides an analysis of the Company’s sales by geographical markets based on locations of customers:

	For the three months ended March 31,
	*2025*		*2026*
Mainland China	$	32,117,416	$	50,956,348
Europe		75,246		4,754,646
India		1,806,299		6,106,951
Africa		-		5,660,703
Others		939,940		2,139,344
Total	$	34,938,901	$	69,617,992

Substantially all of the Company’s long-lived assets are located in the PRC.

29.

Restricted Net Assets

The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Company’s subsidiaries incorporated in PRC only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflected in the financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of the Company’s subsidiaries.

In accordance with the PRC Regulations on Enterprises with Foreign Investment, a foreign invested enterprise established in the PRC is required to provide certain statutory reserve funds, namely general reserve fund, the enterprise expansion fund and staff welfare and bonus fund which are appropriated from net profits as reported in the enterprise’s PRC statutory financial statements. A foreign invested enterprise is required to allocate at least 10% of its annual after-tax profits to the general reserve fund until such reserve fund has reached 50% of its registered capital based on the enterprise’s PRC statutory financial statements. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the board of directors for all foreign invested enterprises. The aforementioned reserved funds can only be used for specific purposes and are not distributable as cash dividends.

Additionally, in accordance with the Company Law of the PRC, a domestic enterprise is required to provide statutory surplus fund at least 10% of its annual after-tax profits until such statutory surplus fund has reached 50% of its registered capital based on the enterprise’s PRC statutory financial statements. A domestic enterprise is also required to provide discretionary surplus fund, at the discretion of the board of directors, from the net profits reported in the enterprise’s PRC statutory financial statements. The aforementioned reserve funds can only be used for specific purposes and are not distributable as cash dividends.

As a result of these PRC laws and regulations that require annual appropriations of 10% of after-tax profits to be set aside prior to payment of dividends as general reserve fund or statutory surplus fund, the Company’s PRC subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. The balance of statutory reserves were $3,042,602 as of December 31, 2025 and March 31, 2026, respectively.

Amounts restricted include paid-in capital, additional paid-in capital and statutory reserve funds, less accumulated deficit, totaling approximately $349,527,050 and $354,324,132 as of December 31, 2025 and March 31, 2026, respectively.

30.

Subsequent events

On May 8, 2026, Shaoxing Hailan entered into a Reorganization Investment Agreement with Ningxia Sinochem Lithium Battery Material Co., Ltd. (“Ningxia Lithium”) and Ninggxia Sinochem Lithium Battery Materials Co., Ltd Assets Manager (“Assets Manager”). Ningxia Sinochem served as a sub-contractor for Hitrans, primarily providing processing services of NCM materials for Hitrans. Due to its financial difficulties, Ningxia Sinochem is currently undergoing a court-administered bankruptcy reorganization. On March 20, 2026, the Zhongwei Intermediate People's Court ruled to approve the reorganization plan of Ningxia Sinochem. Pursuant to the approved reorganization plan and through a public bidding process, Shaoxing Hailan obtained the qualification as the reorganization investor for Ningxia Lithium for a total consideration of RMB110 million (approximately $15.9 million). As of the report date, Shaoxing Hailan has paid RMB10 million (approximate $1.55 million) to the Assets Manager. The transaction has not yet been completed, and the completion is subject to various uncertainties and conditions, and there can be no assurance that the transaction will be ultimately completed.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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

Special Note Regarding Forward Looking Statements

Statements contained in this report include “forward-looking statements” within the meaning of such term in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements regarding future economic conditions or performance; as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, including those identified in Item 1A, “Risk Factors” described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 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:

●

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

●

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

●

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

●

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

●

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

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“Hitrans” are to our 74.36% owned PRC subsidiary, Zhejiang Hitrans Lithium Battery Technology (we hold 73.46% of registered equity interests of Hitrans, representing 79.64% of paid-up capital).

●

“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;

●

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

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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

●

“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 reduced to 73.46% of registered equity interests (representing 79.64% of paid-up capital as of March 31, 2026)) of Hitrans in November 2021, we entered the business of developing and manufacturing NCM precursor and cathode materials. Hitrans is a leading developer and manufacturer of ternary precursor and cathode materials in China, whose products have a wide range of applications on batteries that would be applied to electric vehicles, electric tools, high-end digital products and storage, among others.

As of March 31, 2026, 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 March 31, 2026

The following are some financial highlights for the quarter ended March 31, 2026:

	●	*Net revenues:* Net revenues increased by $34.7 million, or 99%, to $69.6 million for the three months ended March 31, 2026, from $34.9 million for the same period in 2025.

	●	*Gross profit*: Gross profit was $1.0 million, representing a decrease of $3.8 million, or 78.3% for the three months ended March 31, 2026, from gross profit of $4.8 million for the same period in 2025.

	●	*Operating loss:* Operating loss was $9.7 million for the three months ended March 31, 2026, reflecting an increase of $6.8 million from an operating loss of $2.9 million for the same period in 2025.

	●	*Net loss:* Net loss was $9.0 million for the three months ended March 31, 2026, compared to $2.1 million for the same period in 2025.

	●	*Fully diluted loss per share:* Fully diluted loss per share was $0.1 for the three months ended March 31, 2026, as compared to $0.02 for the same period in 2025.

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 if the expected amortization period of the asset that would have been recognized is one 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.

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.

Other income, net. Other income consists primarily of government subsidies received and income generated from non-operating agency-based service.

Income tax expenses. Our subsidiaries in PRC are subject to an income tax rate of 25%, except that Hitrans, CBAK Power, Nanjing CBAK and Nanjing BFD have been recognized as “High and New Technology Enterprises” and enjoy a preferential tax rate of 15% for three years from the approval date, expiring in 2025 to 2026. Our Hong Kong subsidiaries, BAK Asia, BAK Investment and Hong Kong Hitrans, 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, BAK Asia, BAK Investment and Hong Kong Hitrans did not pay any such tax. CBAK Malaysia is subject to income tax laws of Malaysia at the statutory rate of 24%. CBAK Energy California is subject to US federal income tax at a statutory rate of 21% and California state franchise tax at a flat rate of 8.84%. We did not have any assessable income derived from or arising in Malaysia and the United States for the three months ended March 31, 2025 and 2026.

Results of Operations

Comparison of Three Months Ended March 31, 2025 and 2026

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 March 31,						Change
	2025			2026			$			%
Net revenues	$	34,939		$	69,618			34,679			99	%
Cost of revenues		(30,137	)		(68,578	)		(38,441	)		128	%
Gross profit		4,802			1,040			(3,762	)		-78	%

Operating expenses:
Research and development expenses		(3,024	)		(4,220	)		(1,196	)		40	%
Sales and marketing expenses		(896	)		(1,998	)		(1,102	)		123	%
General and administrative expenses		(3,804	)		(4,510	)		(706	)		19	%
Allowance of credit losses, net		58			(12	)		(70	)		-121	%
Total operating expenses		(7,666	)		(10,740	)		(3,074	)		40	%
Operating loss		(2,864	)		(9,700	)		(6,836	)		239	%
Finance income (expense), net		45			(416	)		(461	)		-1,024	%
Other income, net		713			2,068			1,355			190	%
Share of income of equity investee		55			-			(55	)		-100	%
Change in fair value of financial derivatives		-			(906	)		(906	)		n/a
Loss before income tax		(2,051	)		(8,954	)		(6,903	)		337	%
Income tax expenses		-			(7	)		(7	)		n/a
Net income (loss)		(2,051	)		(8,961	)		(6,910	)		337	%
Less: Net loss (income) attributable to non-controlling interests		472			(325	)		(797	)		-169	%
Net loss attributable to shareholders of CBAK Energy Technology, Inc.	$	(1,579	)	$	(9,286	)		(7,707	)		488	%

Net revenues. Net revenues increased by $34.7 million, or 99%, to $69.6 million for the three months ended March 31, 2026, from $34.9 million for the same period in 2025.

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 March 31,				*Change*
	*2025*		*2026*		$		%
High power lithium batteries used in:
Electric vehicles	$	538		2	(536	)		-100	%
Light electric vehicles		2,845		15,408	12,563			442	%
Residential energy supply & uninterruptible power supplies		16,981		22,110	5,129			30	%
		20,364		37,520	17,156			84	%

Materials used in manufacturing of lithium batteries
Cathode		11,261		32,076	20,815			185	%
Precursor		3,314		22	(3,292	)		-99	%
		14,575		32,098	17,523			120	%
Total	$	34,939	$	69,618	34,679			99	%

Net revenues from sales of batteries for electric vehicles were $1,538 for the three months ended March 31, 2026, as compared to $537,507 in the same period of 2025. As our existing cell form factors are well aligned with current market demand across applications in residential energy storage, UPS systems, backup power for AI data centers and light electric vehicles, our sales team focused more on these applications.

Net revenues from sales of batteries for light electric vehicles were $15.4 million for the three months ended March 31, 2026, as compared to $2.8 million in the same period of 2025, an increase of $12.6 million, or 442%. We strive to continue to penetrate the market for batteries used in light electric vehicles, especially the international market such as India, Vietnam and Africa. 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 and uninterruptible power supplies were $22.1 million in the three months ended March 31, 2026, as compared with $17.0 million in the same period in 2025, representing an increase of $5.1 million, or 30%.

Net revenues from sales of materials used in manufacturing lithium batteries were $32.1 million for the three months ended March 31, 2026, as compared to $14.6 million for the same period of 2025, representing an increase of $17.5 million, or 120%. This increase primarily resulted from the successful acquisition of new customers and a highly favorable raw material pricing environment.

Cost of revenues. Cost of revenues increased to $68.6 million for the three months ended March 31, 2026, as compared to $30.1 million for the same period in 2025, an increase of $38.5 million, or 128%. The cost of revenues increased from rising material costs and initial friction costs associated with the Nanjing Phase II expansion and the Dalian 40135 capacity ramp-up. We write down the inventory value whenever there is an indication that it is impaired.

Gross profit. Gross profit for the three months ended March 31, 2026 was $1.0 million, or 1.5% of net revenues as compared to gross profit of $4.8 million, or 13.7% of net revenues, for the same period in 2025. 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. This margin compression was exacerbated by rapidly rising raw material costs that were not fully absorbed by customer pricing. Additionally, initial friction costs associated with the Nanjing Phase II expansion and the Dalian Model 40135 capacity ramp-up temporarily weighed on profitability.

Research and development expenses. Research and development expenses increased to approximately $4.2 million for the three months ended March 31, 2026, as compared to approximately $3.0 million for the same period in 2025, an increase of $1.2 million, or 40%. The increase primarily resulted from the increase of materials and consumables used for the development of series 60 batteries and the increase in salaries and social insurance expenses due to a growing number of employees at CBAK Power and Nanjing CBAK. The materials and consumables used were $0.7 million for the three months ended March 31, 2026 compared to $0.3 million for the same period in 2025. Salaries and social insurance increased by $0.5 million for the three months ended March 31, 2026, compared to the same period in 2025.

Sales and marketing expenses. Sales and marketing expenses increased to approximately $2.0 million for the three months ended March 31, 2026, as compared to approximately $0.9 million for the same period in 2025, an increase of approximately $1.1 million, or 123%. The increase was mainly from our increase of delivery charges by $0.5 million for our overseas sales.

General and administrative expenses. General and administrative expenses increased to $4.5 million for the three months ended March 31, 2026, as compared to $3.8 million for the same period in 2025, representing an increase of $0.7 million, or 19%. The increase mainly resulted from the increase of salaries and social insurance and depreciation expenses corresponding to our expansion in Dalian and Nanjing.

Allowance on expected credit losses, net. The expected credit losses expenses was $12,198 for the three months ended March 31, 2026, as compared to a reversal of $58,395 for the same period in 2025. We determine the allowance based on the current expected credit loss model. The allowance for credit losses is adjusted each period for changes in expected lifetime credit losses.

Operating loss. As a result of the above, our operating loss totaled $9.7 million for the three months ended March 31, 2026, as compared to $2.9 million for the same period in 2025, representing an increase of loss of $6.8 million, or 239%.

Finance income (expenses), net. Finance expenses, net were $0.4 million for the three months ended March 31, 2026, as compared to finance income of $45,120 for the same period in 2025. We did not have any interest capitalization for the three months ended March 31, 2026, compared to $91,289 of interest capitalized for the three months ended March 31, 2025.

Other income, net. Other income was $2.1 million for the three months ended March 31, 2026, as compared to $0.7 million for the same period in 2025. For the three months ended March 31, 2026, we generated $0.6 million from agency-based services provided and received $1.0 million of government assistance. For the three months ended March 31, 2025, we generated $0.5 million from agency-based services provided and received $0.1 million of government assistance.

Loss on derivatives instruments. Loss on derivatives instruments was $0.9 million and nil for the three months ended March 31, 2026 and 2025, respectively. We have entered into foreign currency forward contracts, options swaps, and commodity contracts to mitigate our exposures to exchange rate and raw materials price fluctuations.

Income tax. Income tax expenses were $7,426 and nil for the three months ended March 31, 2026 and 2025, respectively. The income tax expenses for the three months ended March 31, 2026 were incurred by Hitrans segment.

Net loss. As a result of the foregoing, we had a net loss of $9.0 million for the three months ended March 31, 2026, compared to $2.1 million for the same period in 2025.

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 $9.0 million for the three months ended March 31, 2026. As of March 31, 2026, we had cash and cash equivalents of $98.6 million. Our total current assets were $238.4 million and our total current liabilities were $368.2 million as of March 31, 2026, resulting in a net working capital deficit of $129.8 million.

As of March 31, 2026, we had an accumulated deficit of $143.1 million. We had an accumulated deficit from recurring net losses and significant short-term debt obligations maturing in less than one year as of March 31, 2026. These factors raise substantial doubt about our ability to continue as a going concern. The report from our independent registered public accounting firm for the year ended December 31, 2025 included an explanatory paragraph with respect to the substantial doubt about our ability to continue as a going concern.

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.

Lending from Financial Institutions

CBAK Power borrowed a series of acceptance bills from China Zheshang Bank Co., Ltd. Shenyang Branch totaling RMB60.3 million (approximately $8.7 million) for various terms expiring through April to September 2026, which was secured by CBAK Power’s pledged deposits of RMB32.8 million (approximately $4.8 million)), and CBAK Power’s pledged bills receivable of RMB11.2 million (approximately $1.6 million).

Nanjing CBAK borrowed a series of acceptance bills from China Zheshang Bank Co., Ltd. Shenyang Branch totaling RMB69.5 million (approximately $10.1 million) for various terms expiring through April to August 2026, which was secured by Nanjing CBAK’s pledged deposit of RMB62.4 million (approximately $9.0 million), and Nanjing CBAK’s pledged bills receivable of RMB7.4 million (approximately $1.1 million).

Nanjing CBAK borrowed a series of acceptance bills from Bank of Nanjing totaling RMB89.0 million (approximately $12.9 million) for various terms expiring through April to September 2026, which was secured by Nanjing CBAK’s pledged deposit of RMB79.0 million (approximately $11.4 million) and the balance guaranteed by 100% equity of CBAK Nanjing held by BAK Investment.

CBAK Power borrowed a series of acceptance bills from China Construction Bank Co., Ltd totaling RMB100.0 million (approximately $14.5 million) expiring through June to August 2026.

Nanjing CBAK borrowed a series of acceptance bills from Agricultural Bank of China totaling RMB29.7 million (approximately $4.3 million) expiring through June to September 2026, which was secured by Nanjing CBAK’s pledged deposit of RMB9.7 million (approximately $1.4 million) and the balance guaranteed by 100% equity in CBAK Naning held by BAK Investment.

Haisheng borrowed a series of acceptance bills from China CITIC Bank Shaoxing Branch totaling RMB13.9 million (approximately $2.0 million) for various terms expiring through July to September 2026, which was secured by Haisheng’s pledged deposits of RMB6.4 million (approximately $0.9 million) and bills receivables of RMB7.5 million (approximately $1.1 million).

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, 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; (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 (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. 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 March 31, 2026, all the warrants described above had expired without being exercised.

Summary of Cash Flows

We currently are expanding our product 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 bank loans upon maturity, if required, and plan to raise additional funds through bank borrowings and equity financing in the future to meet our daily cash demands, if required. However, there can be no assurance that we will be successful in obtaining such financing. If our existing cash and bank borrowings 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 following table sets forth a summary of our cash flows for the periods indicated:

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

	Three Months Ended March 31,
	2025			2026
Net cash (used in) provided by operating activities	$	(9,621	)	$	22,285
Net cash used in investing activities		(9,903	)		(11,784	)
Net cash provided by financing activities		5,926			11,314
Effect of exchange rate changes on cash and cash equivalents and restricted cash		347			1,105
Net (decrease) increase in cash and cash equivalents and restricted cash		(13,251	)		22,920
Cash and cash equivalents and restricted cash at the beginning of period		60,786			75,677
Cash and cash equivalents and restricted cash at the end of period	$	47,535		$	98,597

Operating Activities

Net cash provided by operating activities was $22.3 million in the three months ended March 31, 2026. The net cash provided by operating activities for the three months ended March 31, 2026 was mainly attributable to our increase of trade and bills payable of $47.3 million and net off by the increase of inventories of $26.8 million.

Net cash used in operating activities was $9.7 million in the three months ended March 31, 2025. The net cash used in operating activities for the three months ended March 31, 2025 was mainly attributable to our increase of inventories of $8.7 million, an increase of trade and bills receivable of $7.4 million offset by a decrease of prepayments and other receivables and an increase in trade and bills payable of $8.2 million.

Investing Activities

Net cash used in investing activities was $11.8 million for the three months ended March 31, 2026 for the purchase of property, plant and equipment.

Net cash used in investing activities was $9.9 million for the three months ended March 31, 2025. The net cash used in investing activities comprised the purchases of property, plant and equipment and construction in progress $12.7 million offset by $2.8 million government subsidy received.

Financing Activities

Net cash provided by financing activities was $11.3 million in the three months ended March 31, 2026. The net cash provided by financing activities for the three months ended March 31, 2026 was mainly attributable to $23.3 million proceeds from bank borrowings offset by repayment of bank borrowings of $11.4 million and repayment of finance lease $0.6 million.

Net cash provided by financing activities was $5.9 million in the three months ended March 31, 2025. The net cash provided by financing activities for the three months ended March 31, 2025 was mainly attributable to $24.3 million proceeds from bank borrowings offset by repayment of bank borrowings of $17.1 million and $1.3 million net movement of short-term time deposits.

As of March 31, 2026, 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:
Zhejiang Shangyu Rural Commercial Bank		11,075		7,652

Short-term credit facilities:
Bank of China Nanjing Gaochun Branch		1,447		1,447
Bank of Communications Co., Ltd Shaoxing Shangyu Branch		22,533		22,444
Bank of Ningbo Co., Ltd. Gaochun Branch		1,447		1,447
China Construction Bank Co., Ltd. Dalian Zhuanghe Branch		11,278		3,616
China Construction Bank Co., Ltd. Shaoxing Branch		2,792		2,792
Industrial Bank Co., Ltd. Shaoxing Shangyu Branch		1,447		1,447
Jiangsu Gaochun Rural Commercial Bank		4,340		4,195
		45,284		37,388
Other lines of credit:
Agricultural Bank of China Nanjing Gaochun Branch		4,293		4,293
Bank of Communications Co., Ltd Shaoxing Shangyu Branch		9,817		9,817
Bank of Nanjing Gaochun Branch		12,870		12,870
Bank of Ningbo Co., Ltd. Gaochun Branch		3,642		3,642
Bank of Ningbo Co., Ltd. Shaoxing Shangyu Branch		2,893		2,893
China CITIC Bank Shaoxing Branch		6,641		6,641
China Construction Bank Co., Ltd. Dalian Zhuanghe Branch		14,460		14,460
China Guangfa Bank Co., Ltd. Dalian Ganjingzi Branch		21,099		7,450
China Zheshang Bank Co., Ltd. Shaoxing Shangyu Branch		5,310		5,310
China Zheshang Bank Co., Ltd. Shenyang Branch		18,779		18,779
Industrial and Commercial Bank of China Co., Ltd. Dalian Zhuanghe Branch		10,398		10,398
Industrial Bank Co., Ltd. Shaoxing Branch		297		297
Zhejiang Shangyu Rural Commercial Bank		19,846		19,846
		130,345		116,696
Total		186,704		161,736

Capital Expenditures

We incurred capital expenditures of $11.8 million and $12.6 million in the three months ended March 31, 2026 and 2025, respectively. Our capital expenditures were used primarily to construct or upgrade our Dalian, Nanjing, Zhejiang and Anhui facilities.

We estimate that our total capital expenditures in fiscal year 2026 will reach approximately $40 million. Such funds will be mainly used to construct new plants with new product lines and battery module packing lines.

Critical Accounting Policies and Estimates

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, 2025 included in the Annual Report on Form 10-K filed on March 31, 2026.

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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, our management has carried out an evaluation, with the participation and under the supervision of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating and implementing possible controls and procedures.

Management conducted its evaluation of disclosure controls and procedures under the supervision of our Chief Executive Officer and our Chief Financial Officer. Based upon, and as of the date of this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were ineffective as of March 31, 2026.

As we disclosed in our Annual Report on Form 10-K filed with the SEC on March 31, 2026, during our assessment of the effectiveness of internal control over financial reporting as of December 31, 2025, management identified the following material weaknesses in our internal control over financial reporting:

●

We did not have appropriate policies and procedures in place to evaluate the proper accounting and disclosures of key documents and agreements.

●

We do not have sufficient and skilled accounting personnel with an appropriate level of technical accounting knowledge and experience in the application of accounting principles generally accepted in the United States commensurate with our financial reporting requirements.

In order to cure the foregoing material weaknesses, we have taken or are taking the following remediation measures:

●

We are in the process of hiring a permanent chief financial officer with significant U.S. GAAP and SEC reporting experience. Ms. Xiangyu Pei was appointed by the Board of Directors of the Company as the Interim Chief Financial Officer on August 23, 2019. Ms. Xiangyu Pei resigned as our Interim Chief Financial Officer on August 22, 2023 but has continued to serve in the Company’s finance department and on the board of director. Mr. Jiewei Li was appointed as the Company’s Chief Financial Officer on August 22, 2023.

●

We have regularly offered our financial personnel trainings on internal control and risk management. We have regularly provided trainings to our financial personnel on U.S. GAAP accounting guidelines. We plan to continue to provide trainings to our financial team and our other relevant personnel on the U.S. GAAP accounting guidelines applicable to our financial reporting requirements.

We intend to complete the remediation of the material weaknesses discussed above as soon as practicable but we can give no assurance that we will be able to do so. Designing and implementing effective disclosure controls and procedures is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to devote significant resources to maintain a financial reporting system that adequately satisfies our reporting obligations. The remedial measures that we have taken and intend to take may not fully address the material weaknesses that we have identified.

Changes in Internal Control over Financial Reporting

Except for the matters described above, there were no changes in our internal controls over financial reporting during the quarter ended March 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The information set forth in Note 26 “Commitments and Contingencies—(ii) Litigation” to our condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q is incorporated by reference herein.

ITEM 1A. RISK FACTORS.

There are no material changes from the risk factors previously disclosed in Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Other than as previously disclosed in current reports on Form 8-K, there were no unregistered sales of equity securities or repurchase of common stock during the period covered by this report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Securities Trading Plans of Directors and Executive Officers

During the fiscal quarter ended March 31, 2026, no director or officer, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408.

ITEM 6. EXHIBITS.

The following exhibits are filed as part of this report or incorporated by reference:

*Exhibit No.*		*Description*

31.1		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certifications of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certifications of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 18, 2026

	CBAK ENERGY TECHNOLOGY, INC.

	By:	/s/ Zhiguang Hu
		Zhiguang Hu
		Chief Executive Officer

	By:	/s/ Jiewei Li
		Jiewei Li
		Chief Financial Officer

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CBAK Energy Technology, Inc. 10-Q