XML 26 R15.htm IDEA: XBRL DOCUMENT

Lease

3 Months Ended

Mar. 31, 2022

9. Lease

(a)	Prepaid land use rights

	Prepaid
	land
	lease payments
Balance as of January 1, 2021	$	7,500,780
Addition for the year		6,188,764
Amortization charge for the year		(189,044	)
Foreign exchange adjustment		296,730
Balance as of December 31, 2021		13,797,230
Amortization charge for the period		(89,718	)
Foreign exchange adjustment		30,359
Balance as of March 31, 2022	$	13,737,871

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

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.

No impairment loss was made to the carrying amounts of the prepaid land use right for the three months ended March 31, 2021 and 2022.

(b)	Company as Lessor

The Company derives a portion of its revenue from leasing arrangements of these vehicles to end users. Such arrangements provide for monthly payments covering the vehicles sales and interest. These arrangements meet the criteria to be accounted for as sales-type leases. Accordingly, vehicle sale net of cost is recorded as other income and recognized upon delivery of the vehicle and its acceptance by the end user. Upon the recognition of such revenue, an asset is established for the investment in sales-type leases. Interests are recognized monthly over the lease term. The components of the net investment in sales-type leases as of December 31, 2021 and March 31, 2022 are as follows:

	December 31,			March 31,
	2021			2022
Total future minimum lease payments receivable	$	1,737,817			1,587,106
Less: unearned income, representing interest		(108,773	)		(79,911	)
Present value of minimum lease payments receivables		1,629,044			1,507,195
Less: Current portion		(790,516	)		(792,262	)
Non-current portion	$	838,528			714,933

Loss on vehicle sale net of cost recognized in other income from vehicle leasing was $91,833 and nil for the three months ended March 31, 2021 and 2022, respectively.

Interest income from vehicle leasing was $26,637 and $29,069 for the three months ended March 31, 2021 and 2022, respectively.

The future minimum lease payments receivable for sales type leases are as follows:

Fiscal years ending	Total Minimum Lease Payments to be Received		Amortization of Unearned Income		Net Investment in Sales Type Leases
Remainder of 2022	$	710,287	$	56,764	$	653,523
2023		685,055		22,568		662,487
2024		191,764		579		191,185
2025		-		-		-
2026		-		-		-
Thereafter		-		-		-
		1,587,106		79,911		1,507,195

(c)	Operating lease

On April, 2018, Hitrans entered into a lease agreement for staff quarters spaces in Zhejiang with a five year term, commencing on May 1, 2018 and expiring on April 30, 2023 The monthly rental payment is approximately RMB18,000 ($2,839) per month. In 2018, lump sum payments were made to landlord for the rental of staff quarter spaces and no ongoing payments will be made under the terms of these leases.

On January 14, 2021, Nanjing Daxin entered into a lease agreement for manufacturing, warehouse and office space in Tianjing with a three year term, commencing on March 1, 2021 and expiring on February 29, 2024. The monthly rental payment is approximately RMB73,143 ($11,535) per month. On February 28, 2022, Nanjing Daxin early terminated the lease after one-year non-cancellable period.

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 ($15,414) per month.

On June 1, 2021, Nanjing Daxin entered into a lease agreement for manufacturing, warehouse and office space in Wuxi with a three year term, commencing on June 1, 2021 and expiring on May 31, 2024. The monthly rental payment is approximately RMB238,095 ($37,548) per month for the first year and approximately RMB277,778 ($43,806) per month from the second year.

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 ($837) 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 RMB9,905 ($1,562) per month for the first year, RMB10,103 ($1,593) and RMB10,305 ($1,625) 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 three year term, commencing on March 1, 2022 and expiring on February 28, 2027. The monthly rental payment is approximately RMB15,840 ($2,497) per month for the first year, with 2% increase per year.

Operating lease expenses for the three months ended March 31, 2021 and 2022 for the capitation agreement was as follows:

	March 31, 2021		March 31, 2022
Operating lease cost – straight line	$	11,321	$	212,691
Total lease expense	$	11,321	$	212,691

The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2022 were as follows:-:

	Operating leases

Remainder of 2022	$	737,297
2023		770,767
2024		41,235
2025		41,859
2026		37,472
Thereafter		-
Total undiscounted cash flows		1,628,630
Less: imputed interest		(79,666	)
Present value of lease liabilities	$	1,548,964

Lease term and discount rate:

	December 31, 2021			March 31, 2022
Weighted-average remaining lease term
Land use rights		38.9			38.7
Operating leases		2.32			2.32

Weighted-average discount rate
Land use rights		Nil			Nil
Operating leases		5.88	%		5.39	%

Supplemental cash flow information related to leases where the Company was the lessee for the three months ended March 31, 2021 and 2022 was as follows:

		March 31, 2021				March 31, 2022
Operating cash outflows from operating assets		$	135,379			$	32,451