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Lease

6 Months Ended

Jun. 30, 2025

10.

Lease

(a)	Prepaid land use rights

	Prepaid land
	lease payments
Balance as of January 1, 2024	$	11,712,704
Amortization charge for the year		(316,811	)
Foreign exchange adjustment		(319,920	)
Balance as of December 31, 2024	$	11,075,973
Addition for the period		1,089,802
Amortization charge for the period		(161,709	)
Foreign exchange adjustment		222,163
Balance as of June 30, 2025	$	12,226,229

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

The Company acquired a land use rights 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 $78,655 and $83,404 for the three months ended June 30, 2024 and 2025, respectively.

Amortization expenses of the prepaid land use rights were $158,054 and $161,709 for the six months ended June 30, 2024 and 2025, respectively.

No impairment loss was made to the carrying amounts of the prepaid land use right for the three and six months ended June 30, 2024 and 2025.

(b)	Operating lease

Nanjing CBAK renewed the lease agreement for warehouse space in Nanjing for one year with a monthly rental of RMB86,913 (approximately $11,907) from May 14, 2024 to May 14, 2025 and further extend the lease for a 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 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. The lease was early terminated in June 2024.

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 RMB25,688 ($3,519) 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 RMB12,844 ($1,760) 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.

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, 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.

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. During the fiscal 2025, the landlord unconditionally forgave the accrued annual rent due to unsatisfied performance from the leasing spaces. The Company recognized the forgiveness as gains in the six months ended June 30, 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.

The Company 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.

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).

The Company 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. The Company have the intention to extend the lease on its expiration.

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

Operating lease expenses for the three and six months ended June 30, 2024 and 2025 for the capitation agreement was as follows:

	Three months ended June 30,					Six months ended June 30,
	2024		2025			2024		2025
Operating lease cost – straight line	$	308,479	$	306,792		$	619,739	$	615,082
Negative contingent rent		-		(439,274	)		-		(439,274	)
	$	308,479	$	(132,482	)	$	619,739	$	175,808

The following is a schedule, by years, of maturities of lease liabilities as of June 30, 2025:

	Operating leases
Remainder of 2025	$	908,415
2026		845,415
2027		676,605
2028		465,069
2029		454,639
Thereafter		444,714
Total undiscounted cash flows		3,794,857
Less: imputed interest		(320,315	)
Present value of lease liabilities	$	3,474,542

Lease term and discount rate:

	December 31, 2024			June 30, 2025
Weighted-average remaining lease term (years)
Land use rights		35.9			36.7
Operating leases		4.16			3.5

Weighted-average discount rate
Land use rights		Nil			Nil
Operating lease		4.33	%		4.18	%
Finance lease		2.9	%		Nil

Supplemental cash flow information related to leases where the Company was the lessee for the three and six months ended June 30, 2024 wand 2025 was as follows:

	Three months ended June 30,				Six months ended June 30,
	2024		2025		2024		2025
Operating cash outflows from operating assets	$	361,860	$	296,347	$	431,817	$	433,531