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Loans

9 Months Ended

Sep. 30, 2019

Loans [Abstract]

Loans

12.

Loans

Bank loans:

Bank borrowings as of December 31, 2018 and September 30, 2019 consisted of the followings

	December 31,		September 30,
	2018		2019
Current maturities of long-term bank loans	$	3,659,324	$	10,562,506
Long-term bank borrowings		20,614,194		9,388,894
	$	24,273,518	$	19,951,400

On June 14, 2016, the Company renewed its banking facilities from Bank of Dandong for loans with a maximum amount of RMB130 million (approximately $18.2 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, 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 $17.7 million), bearing fixed interest at 7.2% per annum. The Company also borrowed various bank acceptance bills of RMB3.2 million (approximately $0.4 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. The Company repaid the bank acceptance bills on October 17, 2018.

On August 2, 2017, the Company obtained one-year term facilities from China Merchants Bank with a maximum amount of RMB100 million (approximately $14.0 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, the Company borrowed a series of bank acceptance bills from China Merchants Bank totaled RMB21.3 million (approximately $3.0 million) for a term until October 25, 2018. The facilities expired on August 1, 2018 and the Company repaid the bills on October 25, 2018.

On November 9, 2017, the Company obtained banking facilities from China Everbright Bank Dalian Branch with a maximum amount of RMB100 million (approximately $14.0 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. The Company borrowed a net letter of credit of RMB96.1 million (approximately $13.4 million) to November 7, 2018. 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 $28.0 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 RMB0.8 million ($0.11 million) on December 10, 2018, RMB24.3 million ($3.40 million) on June 10, 2019, RMB0.8 million ($0.11 million) on December 10, 2019, RMB74.7 million ($10.45 million) on June 10, 2020, RMB0.8 million ($0.11 million) on December 10, 2020 and RMB66.3 million ($9.27 million) on June 10, 2021. The Company repaid the bank loan of RMB0.8 million ($0.11 million) in December 2018 and RMB24.3 million ($3.4 million) in June 2019. Under the facilities, the Company borrowed RMB142.6 million (approximately $19.94 million) as of September 30, 2019. 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 $8.4 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 $8.7 million. The Company discounted these two bills payable of even date to China Everbright Bank at a rate of 4.0%. The Company repaid these bills payable in August 2019.

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 $14.0 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. The Company borrowed a series of bank acceptance bills totaled RMB28.8 million (approximately $4.03 million) for a term until March 7, 2019. The Company repaid the bank acceptance bills on March 7, 2019.

In November 2018, the Company borrowed a total of RMB100 million (approximately $14.0 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 $7.0 million) and the 100% equity in CBAK Power held by BAK Asia. The Company discounted the bills payable of even date to China Everbright Bank at a rate of 4.0%.

The Company also borrowed a series of acceptance bills from Industrial Bank Co., Ltd. Dalian Branch totaled RMB1.5 million (approximately $0.2 million) for various terms through May 21, 2019, which was secured by bills receivable of RMB1.5 million (approximately $0.2 million). The Company repaid the bank acceptance bills on May 21, 2019.

On October 15, 2019, the Company borrowed a total of RMB28 million (approximately $3.9 million) in the form of bills payable from China Everbright Bank Dalian Branch for a term until October 15, 2020, which was secured by the Company's cash totaled RMB28 million (approximately $3.9 million). The Company discounted the bills payable of even date to China Everbright Bank at a rate of 3.3%.

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

	December 31,		September 30,
	2018		2019
Pledged deposits (note 2)	$	16,014,118	$	6,994,110
Prepaid land use rights (note 9)		7,446,117		7,046,437
Buildings		17,501,902		19,164,628
Machinery and equipment		10,206,100		8,297,861
Bills receivable (note 3)		6,353,342		-
	$	57,521,579	$	41,503,036

As of September 30, 2019, the Company had unutilized committed banking facilities of $4.6 million.

During the three months ended September 30, 2018 and 2019, interest of $537,033 and $485,179, respectively, was incurred on the Company's bank borrowings.

During the nine months ended September 30, 2018 and 2019, interest of $1,633,731 and $1,235,704, respectively, was incurred on the Company's bank borrowings.

Other Short-term Loans

Other short-term loans as of December 31, 2018 and September 30, 2019 consisted of the following:

			December 31,		September 30,
	Note		2018		2019
Advance from related parties
– Tianjin BAK New Energy Research Institute Co., Ltd ("Tianjin New Energy")		(a)	$	11,095,070	$	-
– Mr. Xiangqian Li, the Company's Former CEO		(b)		100,000		100,000
– Mr. Yunfei Li		(c)		116,307		403,274
– Shareholders		(d)		2,035,381		1,024,434
				13,346,758		1,527,708
Advances from unrelated third party
– Mr. Wenwu Yu		(e)		146,813		29,351
– Mr. Longqian Peng		(e)		654,230		629,470
– Mr. Shulin Yu.		(g)		-		503,576
– Jilin Province Trust Co. Ltd		(f)		-		5,539,335
– Suzhou Zhengyuanwei Needle Ce Co., Ltd		(e)		-		69,941
				801,043		6,771,673
			$	14,147,801	$	8,299,381

(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.

On January 7, 2019, each of Mr. Dawei Li and Mr. Yunfei Li (the Company's CEO) entered into an agreement with CBAK Power and Tianjin New Energy whereby Tianjin New Energy assigned its rights to loans to CBAK Power of approximately $3.5 million (RMB23,980,950) and $1.7 million (RMB11,647,890) (collectively $5.2 million, the "First Debt") to Mr. Dawei Li and Mr. Yunfei Li, respectively.

On January 7, 2019, the Company entered into a cancellation agreement (note 1) with Mr. Dawei Li and Mr. Yunfei Li (the creditors). Pursuant to the terms of the cancellation agreement, Mr. Dawei Li and Mr. Yunfei Li agreed to cancel the First Debt in exchange for 3,431,373 and 1,666,667 shares of common stock of the Company, respectively, at an exchange price of $1.02 per share. Upon receipt of the shares, the creditors will release the Company from any claims, demands and other obligations relating to the First Debt. The cancellation agreement contains customary representations and warranties of the creditors. The creditors do not have registration rights with respect to the shares.

On April 26, 2019, each of Mr. Jun Lang, Ms. Jing Shi and Asia EVK Energy Auto Limited ("Asia EVK") entered into an agreement with CBAK Power and Tianjin New Energy whereby Tianjin New Energy assigned its rights to loans to CBAK Power of approximately $0.3 million (RMB2,225,082), $0.1 million (RMB 912,204) and $5.2 million (RMB35,406,036) (collectively $5.7 million, the "Second Debt") to Mr. Jun Lang, Ms. Jing Shi and Asia EVK, respectively.

On April 26, 2019, the Company entered into a cancellation agreement (note 1) with Mr. Jun Lang, Ms. Jing Shi and Asia EVK (the creditors). Pursuant to the terms of the cancellation agreement, the creditors agreed to cancel the Second Debt in exchange for 300,534, 123,208 and 4,782,163 shares of common stock of the Company, respectively, at an exchange price of $1.1 per share. Upon receipt of the shares, the creditors will release the Company from any claims, demands and other obligations relating to the Second Debt. The cancellation agreement contains customary representations and warranties of the creditors. The creditors do not have registration rights with respect to the shares.

	(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 earnest money paid by certain shareholders in relation to share purchase (note 1) were unsecured, non-interest bearing and repayable on demand. On October 14, 2019, the Company entered into a cancellation agreement with Mr. Shangdong Liu, Ms. Lijuan Wang and Mr. Ping Shen (the creditors). Pursuant to the terms of the cancellation agreement, Mr. Shangdong Liu, Ms. Lijuan Wang and Mr. Ping Shen agreed to convert the earnest money in exchange for 528,053, 528,053 and 528,053 shares of common stock of the Company, respectively, at an exchange price of $0.6 per share. Upon receipt of the shares, the creditors will release the Company from any claims, demands and other obligations relating to the earnest money. The cancellation agreement contains customary representations and warranties of the creditors. The creditors do not have registration rights with respect to the shares. Up to the date of this report, earnest money of $84,425 remained outstanding.

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

	(f)	In January 2019, the Company obtained one-year term facilities from Jilin Province Trust Co. Ltd. with a maximum amount of RMB40.0 million (approximately $5.6 million), which was secured by land use rights and buildings of Eodos Liga Energy Co., Ltd. Under the facilities, the Company borrowed RMB16.4 million ($2.3 million), RMB15.4 million ($2.2 million), RMB6.6 million ($0.9 million) and RMB1.2 million ($0.2 million) on February 1, 2019, February 22, 2019, March 8, 2019 and March 21, 2019 respectively, bearing annual interest from 11.3% to 11.6%.

	(g)	On June 25, 2019, the Company entered into a loan agreement with Mr. Shulin Yu, an unrelated party, to loan RMB3.6 million (approximately $0.5 million) for a term of one year, bearing annual interest of 10% which was guaranteed by Mr. Yunfei Li (the Company's CEO) and Mr. Wenwu Wang (the Company's former CFO). As of September 30, 2019, the Company borrowed RMB3.6 million (approximately $0.5 million).