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Loans

9 Months Ended

Sep. 30, 2018

12.

Loans

Bank loans:

Bank borrowings as of December 31, 2017 and September 30, 2018 consisted of the followings

		December 31,		September 30,
		2017		2018
Current maturities of long-term bank loans	$	-	$	4,368,211
Long-term bank borrowings		19,489,702		18,681,383
	$	19,489,702	$	23,049,594

On June 14, 2016, the Company renewed its banking facilities from Bank of Dandong for loans with a maximum amount of RMB130 million (approximately $18.9 million), including three-year long-term loans and three-year revolving bank acceptance and letters of credit bills for the period from June 13, 2016 to June 12, 2019. The banking facilities were guaranteed by Mr. Yunfei Li (“Mr. Li”), the Company’s CEO, and Ms. Qinghui Yuan, Mr. Li’s wife, Mr. Xianqian Li, the Company’s former CEO, Ms. Xiaoqiu Yu, the wife of the Company’s former CEO, Shenzhen BAK Battery Co., Ltd., the Company’s former subsidiary (“Shenzhen BAK”). Under the banking facilities, the Company borrowed various three-year term bank loans that totaled RMB126.8 million (approximately $18.5 million), bearing fixed interest at 7.2% per annum. The Company also borrowed various bank acceptance of RMB3.2 million (approximately $0.5 million) under the facilities. The Company repaid the loan and bank acceptance bills on June 12, 2018.

In the second quarter of 2018, the Company obtained another banking facilities from Bank of Dandong with bank acceptance bills of RMB5.0 million (approximately $0.7 million) for a term until October 17, 2018. As of September 30, 2018, the Company has borrowed a series of bank acceptance bills totaled RMB5.0 million (approximately $0.7 million) for a term until October 17, 2018, which was secured by bank deposit of $0.7 million. The Company repaid the bank acceptance bills on October 17, 2018.

On July 6, 2016, the Company obtained banking facilities from Bank of Dalian for loans with a maximum amount of RMB10 million (approximately $1.5 million) and bank acceptance bills of RMB40 million (approximately $5.8 million) to July 5, 2017. The banking facilities were guaranteed by Mr. Li, the Company’s CEO, and Ms. Qinghui Yuan, Mr. Li’s wife, and Shenzhen BAK. Under the banking facilities, on July 6, 2016 the Company borrowed one year short-term loan of RMB10 million (approximately $1.5 million), bearing a fixed interest rate at 6.525% per annum. The Company also borrowed revolving bank acceptance totaled $5.8 million, and bank deposit of 50% was required to secure against these bank acceptance bills. The Company repaid the loan and bank acceptance bills in July and August 2017.

On November 9, 2017, the Company obtained banking facilities from China Everbright Bank Dalian Branch with a maximum amount of RMB100 million (approximately $14.6 million) with the term expiring on November 7, 2018. The banking facilities were secured by the 100% equity in CBAK Power held by BAK Asia. Under the facilities, bank deposits of approximately 50% were required to secure against this letter of credit. As of September 30, 2018, the Company borrowed a net letter of credit of RMB99.6 million (approximately $14.5 million) to November 5, 2018, which was secured by bank deposits of $7.3 million. The Company discounted this letter of credit of even date to China Everbright Bank at a rate of 4.505%. The Company repaid the letter of credit on November 7, 2018.

On June 4, 2018, the Company obtained banking facilities from China Everbright Bank Dalian Branch with a maximum amount of RMB200 million (approximately $29.1 million) with the term from June 12, 2018 to June 10, 2021, bearing interest at 130% of benchmark rate of the People’s Bank of China (“PBOC”) for three-year long-term loans, at current rate 6.175% per annum. The loans are repayable in six installments of RMB1.0 million ($0.15 million) on December 10, 2018, RMB29.0 million ($4.22 million) on June 10, 2019, RMB1.0 million ($0.15 million) on December 10, 2019, RMB89.0 million ($12.96 million) on June 10, 2020, RMB1.0 million ($0.15 million) on December 10, 2020 and RMB37.3 million ($5.43 million) on June 10, 2021. Under the facilities, the Company borrowed RMB158.3 million (approximately $23.1 million) as of September 30, 2018. The facilities were secured by the Company’s land use rights, buildings, machinery and equipment.

Further, in August 2018, the Company borrowed a total of RMB60 million (approximately $8.8 million) in the form of bills payable from China Everbright Bank Dalian Branch for a term until August 14, 2019, which was secured by the Company’s cash totaled $8.8 million. The Company discounted these two bills payable of even date to China Everbright Bank at a rate of 4.0%.

On August 22, 2018, the Company obtained one-year term facilities from China Everbright Bank Dalian Branch with a maximum amount of RMB100 million (approximately $14.6 million) including revolving loans, trade finance, notes discount, and acceptance of commercial bills etc. Any amount drawn under the facilities requires security in the form of cash or banking acceptance bills receivables of at least the same amount. Under the facilities, as of September 30, 2018, the Company borrowed a series of bank acceptance bills totaled RMB26.3 million (approximately $3.8 million) for a term until March 7, 2019, which was secured by bills receivable of $4.4 million.

On August 2, 2017, the Company obtained one-year term facilities from China Merchants Bank with a maximum amount of RMB100 million (approximately $14.6 million) including revolving loans, trade finance, notes discount, and acceptance of commercial bills etc. Any amount drawn under the facilities requires security in the form of cash or banking acceptance bills receivable of at least the same amount. Under the facilities, as of September 30, 2018, the Company borrowed a series of bank acceptance bills from China Merchants Bank totaled RMB21.3 million (approximately $3.1 million) for a term until October 25, 2018, which was secured by bills receivable of $3.07 million and bank deposits of $0.03 million. The facilities expired on August 1, 2018 and the Company repaid the bills on October 25, 2018.

As of September 30, 2018, the Company also borrowed a series of acceptance bills from Industrial Bank Co., Ltd. Dalian Branch totaled RMB19.5 million (approximately $2.8 million) for various terms through February 8, 2019, which was secured by bank deposits of $0.9 million and bills receivable of $1.9 million.

In November 2018, the Company borrowed a total of RMB100 million (approximately $14.6 million) in the form of bills payable from China Everbright Bank Dalian Branch for a term until November 12, 2019, which was secured by the Company’s cash totaled RMB50 million (approximately $7.3 million) and the 100% equity in CBAK Power held by BAK Asia. The Company discounted these five bills payable of even date to China Everbright Bank at a rate of 4.0%.

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

		December 31,		September 30,
		2017		2018
Pledged deposits (note 2)	$	7,808,329	$	17,668,797
Prepaid land use rights (note 9)		8,044,935		7,498,421
Buildings		18,391,993		16,848,321
Machinery and equipment		2,374,748		6,420,884
Bills receivable (note 3)		19,047,471		9,427,448
	$	55,667,476	$	57,863,871

As of September 30, 2018, the Company had unutilized committed banking facilities of $16.8 million.

During the three months ended September 30, 2017 and 2018, interest of $346,962 and $537,033, respectively, was incurred on the Company's bank borrowings.

During the nine months ended September 30, 2017 and 2018, interest of $1,050,474 and $1,633,731, respectively, was incurred on the Company's bank borrowings.

Other Short-term Loans

Other short-term loans as of December 31, 2017 and September 30, 2018 consisted of the following:

			December 31,		September 30,
	Note		2017		2018
Advance from related parties
– Tianjin BAK New Energy Research Institute Co., Ltd (“Tianjin New Energy”)	(a)	$	11,493,437	$	13,139,584
– Mr. Xiangqian Li, the Company’s Former CEO	(b)		100,000		100,000
– Mr. Yunfei Li	(c)		-		116,486
– Shareholders	(d)		2,151,860		2,038,499
			13,745,297		15,394,569
Advances from unrelated third party
– Mr. Wenwu Yu	(e)		155,215		147,038
– Mr. Mingzhe Li	(e)		44,269		-
– Ms. Longqian Peng	(e)		691,669		655,231
– Hubei Yanguang Energy Technology., Ltd	(e)		-		72,804
			891,153		875,073
		$	14,636,450	$	16,269,642

	(a)	The Company received advances from Tianjin New Energy, a related company under the control of Mr. Xiangqian Li, the Company’s former CEO, which was unsecured, non-interest bearing and repayable on demand. On November 1, 2016, Mr. Xiangqian Li ceased to be a shareholder but remained as a general manager of Tianjin New Energy.

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

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

	(d)	The refundable deposits paid by certain shareholders in relation to share purchase (note 1) were unsecured, non-interest bearing and repayable on demand.

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