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Lease | 9 Months Ended
--- | ---
Sep. 30, 2024
Lease [Abstract] |
Lease |
| 10. | Lease
(a) Prepaid land use rights
|  | Prepaid land |
|  | lease payments |
Balance as of January 1, 2023 |  | $ | 12,361,163 |
Amortization charge for the year |  |  | (322,160 | )
Foreign exchange adjustment |  |  | (326,299 | )
Balance as of December 31, 2023 |  |  | 11,712,704 |
Amortization charge for the period |  |  | (237,565 | )
Foreign exchange adjustment |  |  | 125,939 |
Balance as of September 30, 2024 |  | $ | 11,601,078 |
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. Amortization expenses of the prepaid land use rights were $71,636 and $79,511 for the three months ended September 30, 2023 and 2024 and $236,173 and $237,565 for the nine months ended September 30, 2023 and 2024, respectively. No impairment loss was made to the carrying amounts of the prepaid land use right for the three and nine months ended September 30, 2023 and 2024. (b) 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 ($2,621) 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 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 ($14,230) per month. The lease was renewed for one year with a monthly rental of RMB90,224 (approximately $12,856) to May 14, 2025. 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 RMB10, 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 three 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 August 1, 2022, Hitrans entered into a lease agreement for warehouse spaces in Zhejiang with a one and half years term, commencing on August 1, 2022 and expiring on January 31, 2024. The monthly rental payment is RMB60,394 ($8,792) per month. On October 20, 2022, CBAK Power entered into a lease agreement for staff quarters spaces in Dalian with a five 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 December 30, 2022, Hitrans entered into a lease agreement with liquid gas supplier for a five year term for supplying liquid nitrogen and oxygen to December 29, 2027. The monthly rental payment is approximately RMB7,265 ($1,058) per month. 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. The Company entered into a lease agreement for manufacturing and factory spaces in Shangqiu with a terms of six years, commencing on January 1, 2024 to December 31, 2029. The monthly rental payment is RMB265,487 ($36,769) per month. The Company has entered into a lease agreement for staff quarters spaces in Shangqiu from May 16, 2024 to December 31, 2029 for a monthly rental of RMB19,404 ($2,765). Operating lease expenses for the three and nine months ended September 30, 2023 and 2024 for the capitation agreement was as follows:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2023 |  |  | 2024 |  |  | 2023 |  |  | 2024 |
Operating lease cost – straight line |  | $ | 110,057 |  |  | $ | 337,405 |  |  | $ | 375,804 |  |  | $ | 957,144 |
(c) Company as lessee - Finance lease
|  | December 31, |  |  | September 30, |
|  | 2023 |  |  | 2024 |
Property, plant and equipment, at cost |  | $ | 4,598,426 |  |  | $ | 8,441,208 |
Accumulated depreciation |  |  | (828,351 | ) |  |  | (2,337,763 | )
Impairment |  |  | (3,770,075 | ) |  |  | (6,103,445 | )
Property, plant and equipment, net under finance lease |  |  | - |  |  |  | - |
Finance lease liabilities, current |  |  | 1,643,864 |  |  |  | 762,694 |
Finance lease liabilities, non-current |  |  | - |  |  |  | - |
Total finance lease liabilities |  | $ | 1,643,864 |  |  | $ | 762,694 |
The components of finance lease expenses for the three and nine months ended September 30, 2023 and 2024 were as follows:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2023 |  |  | 2024 |  |  | 2023 |  |  | 2024 |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Depreciation of assets |  |  | 44,275 |  |  |  | - |  |  |  | 102,999 |  |  |  | - |
Interest of lease liabilities |  |  | 4,995 |  |  |  | 20,242 |  |  |  | 11,622 |  |  |  | 60,479 |
Total lease expense |  | $ | 49,270 |  |  | $ | 20,242 |  |  | $ | 114,621 |  |  | $ | 60,479 |
The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2024:
|  | Operating leases |  |  | Finance leases |
Remainder of 2024 |  | $ | 769,615 |  |  | $ | 781,978 |
2025 |  |  | 1,031,673 |  |  |  | - |
2026 |  |  | 928,195 |  |  |  | - |
2027 |  |  | 516,579 |  |  |  | - |
2028 |  |  | 486,314 |  |  |  | - |
Thereafter |  |  | 932,643 |  |  |  | - |
Total undiscounted cash flows |  |  | 4,665,019 |  |  |  | 781,978 |
Less: imputed interest |  |  | (453,418 | ) |  |  | (19,284 | )
Present value of lease liabilities |  | $ | 4,211,601 |  |  | $ | 762,694 |
Lease term and discount rate:
|  | December 31, 2023 |  |  | September 30, 2024 |
Weighted-average remaining lease term |  |  |  |  |  |  |  |
Land use rights |  |  | 36.9 |  |  |  | 36.2 |
Operating lease |  |  | 2.71 |  |  |  | 4.18 |
Finance lease |  |  | 0.96 |  |  |  | 0.16 |
Weighted-average discount rate |  |  |  |  |  |  |  |
Land use rights |  |  | Nil |  |  |  | Nil |
Operating lease |  |  | 4.69 | % |  |  | 4.35 | %
Finance lease |  |  | 1.37 | % |  |  | 2.9 | %
Supplemental cash flow information related to leases where the Company was the lessee for the three and nine months ended September 30, 2023 and 2024 was as follows:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2023 |  |  | 2024 |  |  | 2023 |  |  | 2024 |
Operating cash outflows from operating assets |  | $ | 92,457 |  |  | $ | 120,979 |  |  | $ | 483,932 |  |  | $ | 552,796 |

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- Definition The entire disclosure for operating leases of lessee. Includes, but is not limited to, description of operating lease and maturity analysis of operating lease liability. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 842 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/842-20/tableOfContent + Details
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