10-Q: CBAK Energy Q3 Revenue Up, 9-Month Profit Plunges Amid Restructuring

Sentiment:

Quarterly Report 10 November 2025 7:31 AM

📋All filings for Cbak Energy Technology, INC

CBAK Energy Technology reports a 37% increase in Q3 revenue, driven by light electric vehicles and materials, but a significant 63% drop in nine-month gross profit and a net loss raise going concern doubts.

Delay expectedThe equity transfer process for Nanjing CBAK's acquisition of a 5% equity interest in BAK SZ has taken longer than expected, leading to a supplemental agreement on March 7, 2025, to extend the transaction period.The Follow-on Acquisition of an additional 44% equity interest in Zhejiang Shengyang by Hitrans has not been completed, and management is in negotiations regarding a potential postponement of the payment and equity transfer.

Capital raiseThe company plans to raise additional funds through bank borrowings in the future to meet its daily cash demands and finance expansion.The company plans to raise additional funds through equity financing in the future to meet its daily cash demands and finance expansion.

Worse than expectedThe company reported a net loss of $2.0 million for the nine months ended September 30, 2025, a significant deterioration from a net income of $16.3 million in the prior year period.Gross profit for the nine months ended September 30, 2025, plummeted by 63% to $14.1 million, indicating substantial pressure on profitability.Operating results shifted from an income of $15.4 million to a loss of $10.4 million for the nine-month period, reflecting increased operational inefficiencies or costs.The company explicitly states 'substantial doubt about the Company ability to continue as a going concern' due to recurring net losses, a working capital deficiency of $70.3 million, and significant short-term debt obligations.Disclosure controls and procedures were deemed ineffective, and material weaknesses in internal control over financial reporting were identified, which are critical governance failures.

Summary

Net revenues for the three months ended September 30, 2025, increased by 37% to $60.9 million, up from $44.6 million in the same period of 2024.
Gross profit for the three months ended September 30, 2025, decreased by 30% to $4.9 million (8.0% of net revenues) from $7.0 million (15.6% of net revenues) in the prior year.
Operating loss for the three months ended September 30, 2025, widened to $4.0 million, an increase in loss of 387% from $0.8 million in the same period of 2024.
Net income for the three months ended September 30, 2025, was $2.7 million, a substantial increase from $0.02 million in the same period of 2024.
For the nine months ended September 30, 2025, net revenues decreased by 10% to $136.4 million from $151.2 million in the prior year period.
Nine-month gross profit plummeted by 63% to $14.1 million (10.4% of net revenues) from $38.5 million (25.4% of net revenues) in the same period of 2024.
The company reported an operating loss of $10.4 million for the nine months ended September 30, 2025, a significant decline from an operating income of $15.4 million in the prior year period.
Net loss for the nine months ended September 30, 2025, was $2.0 million, a reversal from a net income of $16.3 million in the same period of 2024.
Diluted loss per share for the nine months ended September 30, 2025, was $(0.02), compared to diluted income per share of $0.18 in the prior year period.
As of September 30, 2025, the company had a working capital deficiency of $70.3 million and an accumulated deficit of $126.4 million, raising substantial doubt about its ability to continue as a going concern.
The company received a $5.0 million compensation from a cancelled customer order during the three months ended September 30, 2025.

Sentiment

Score: 3

Explanation: The overall sentiment is negative due to the significant decline in nine-month profitability, the shift to a net loss, and the explicit 'going concern' warning. While Q3 revenue and net income showed improvement, the broader nine-month trend and fundamental liquidity issues, coupled with internal control weaknesses, outweigh these short-term positives.

Positives

Net revenues for the three months ended September 30, 2025, increased by 37% to $60.9 million, demonstrating strong quarterly growth.
Net income for the three months ended September 30, 2025, significantly improved to $2.7 million from $0.02 million in the prior year quarter.
Sales of batteries for light electric vehicles (LEV) surged by 270% to $18.2 million in Q3 2025 and by 184% to $23.4 million for the nine months ended September 30, 2025, driven by international market penetration (India and Vietnam).
Net revenues from materials used in manufacturing lithium batteries (Hitrans segment) increased by 144% to $27.2 million in Q3 2025 and by 64% to $61.2 million for the nine months ended September 30, 2025, due to new customer acquisition and favorable raw material prices.
The company received a $5.0 million compensation from a cancelled customer order in Q3 2025, contributing to other income.
A new subsidiary, CBAK Malaysia, was established on April 30, 2025, to focus on manufacturing and sales of cylindrical lithium cells for overseas markets.

Negatives

Net revenues for the nine months ended September 30, 2025, decreased by 10% to $136.4 million compared to $151.2 million in the prior year period.
Gross profit for the nine months ended September 30, 2025, significantly declined by 63% to $14.1 million (10.4% margin) from $38.5 million (25.4% margin) in the prior year period.
The company shifted from an operating income of $15.4 million for the nine months ended September 30, 2024, to an operating loss of $10.4 million for the same period in 2025.
A net loss of $2.0 million was reported for the nine months ended September 30, 2025, a reversal from a net income of $16.3 million in the prior year period.
Sales of batteries for residential energy supply & uninterruptible power supplies decreased by 45% in Q3 2025 and 51% for the nine months ended September 30, 2025, due to production changes at Dalian facilities.
The company has an accumulated deficit of $126.4 million and a working capital deficiency of $70.3 million as of September 30, 2025, raising substantial doubt about its ability to continue as a going concern.
General and administrative expenses increased by 39% in Q3 2025 and 10% for the nine months ended September 30, 2025, primarily due to higher salaries and social insurance costs for new production lines.
Research and development expenses increased by 12% in Q3 2025 and 14% for the nine months ended September 30, 2025, mainly due to increased materials and consumables for new battery development.

Risks

The company has an accumulated deficit from recurring net losses, a working capital deficiency, and significant short-term debt obligations maturing in less than one year, raising substantial doubt about its ability to continue as a going concern.
Ineffective disclosure controls and procedures were identified as of September 30, 2025.
Material weaknesses exist in internal control over financial reporting, including a lack of appropriate policies and procedures for accounting and disclosures of key documents and agreements, and insufficient skilled accounting personnel with US GAAP and SEC reporting experience.
The company is involved in a lawsuit with Haoneng for $1.5 million (RMB10.2 million) for failure to pay for equipment, with a potential penalty of 15% of $2.2 million (RMB15.1 million) if purchase conditions are not met.
The equity transfer process for acquiring a 5% equity interest in BAK SZ for $35.7 million (RMB260 million) has taken longer than expected, with the transaction period extended.
Negotiations are ongoing for a potential postponement of payment and equity transfer for the Follow-on Acquisition of an additional 44% equity interest in Zhejiang Shengyang.
The company's business has been and may continue to be adversely affected by outbreaks of viruses or other health epidemics, such as COVID-19, which previously impacted production capacity.
Dependence on bank borrowings and equity financing to meet daily cash demands and fund expansion, with no assurance that financing will be available on acceptable terms or at all.
The sale of equity securities, including convertible debt, would dilute the interests of current shareholders.
Incurrence of debt could divert cash for working capital and capital expenditures to service debt obligations and result in restrictive operating and financial covenants.

Future Outlook

The company is currently expanding its production lines and manufacturing capacity across its Dalian, Nanjing, Zhejiang, and Anhui plants, which will require additional funding. It plans to raise additional funds through bank borrowings and equity financing to meet daily cash demands and finance this expansion. Gross profit margins are expected to gradually recover upon the completion of the product portfolio upgrade at the Dalian facilities, transitioning from Model 26650 to Model 40135 batteries.

Management Comments

We strive to continue to penetrate the market for batteries used in light electric vehicles, especially the international markets such as India and Vietnam.
Our sales campaign in the international markets has contributed to a rebound in our sales volume in the light electric vehicle sector.
The substantial decline in residential energy supply & uninterruptable power supplies revenue primarily stems from production changes at our Dalian facilities, which are undergoing a product portfolio upgrade.
We expect gross profit margins to gradually recover upon the upgrade from Model 26650 to Model 40135.
Our raw materials division, Hitrans, has been making significant efforts to expand its market presence, successfully securing several new customers.
A slight decline in raw material prices for Hitrans's products during the first half of 2025 further stimulated customer demand and encouraged order placements.
The increase in general and administrative expenses primarily resulted from salaries and social insurance expenses due to a growing number of employees at Nanjing CBAK and CBAK Power on the new production lines.
We are in the process of hiring a permanent chief financial officer with significant U.S. GAAP and SEC reporting experience.
We have regularly offered our financial personnel trainings on internal control and risk management and plan to continue to provide trainings on U.S. GAAP accounting guidelines.

Industry Context

The company operates in the dynamic new energy battery market, focusing on high-power lithium and sodium batteries for light electric vehicles (LEV), electric vehicles (EV), and energy storage. The strong growth in LEV sales, particularly in international markets like India and Vietnam, aligns with global trends towards sustainable transportation. The expansion of the raw materials division (Hitrans) in NCM precursor and cathode materials positions the company within the critical supply chain for lithium batteries. The shift in battery models (26650 to 40135) reflects an industry-wide drive towards higher performance and modern battery technologies. However, the significant decline in residential energy supply sales suggests competitive pressures or internal operational challenges in that specific segment.

Comparison to Industry Standards

Management Changes

Role	Previous Person	New Person	Effective Date	Reason
Chief Financial Officer	Ms. Xiangyu Pei (Interim)	Mr. Jiewei Li	August 22, 2023	Ms. Xiangyu Pei resigned as Interim CFO; Mr. Jiewei Li was appointed.

Corporate Governance

Change Type	Description	Effective Date	Impact Assessment
Internal Control Weaknesses	Management concluded that disclosure controls and procedures were ineffective as of September 30, 2025. Material weaknesses include a lack of appropriate policies and procedures for evaluating accounting and disclosures of key documents, and insufficient skilled accounting personnel with US GAAP and SEC reporting experience.	September 30, 2025	Raises concerns about the reliability of financial reporting and compliance with regulatory requirements. Remediation efforts are underway but no assurance of full resolution.

Legal Proceedings

Haoneng filed a lawsuit against CBAK Power for failure to pay $1.5 million (RMB10,257,030) for equipment, including $1.3 million (RMB9,072,000) in equipment cost and $0.2 million (RMB1,185,030) in interest. An agreement was reached to extend the purchase contract to December 31, 2023, requiring CBAK Power to purchase at least $2.4 million (RMB15,120,000) in equipment or pay a 15% penalty. As of September 30, 2025, the equipment was not received, and the cost is included in capital commitments.

Related Party Transactions

Purchases of batteries from Zhengzhou BAK: $816,211 (Q3 2025) and $3,698,469 (9 months 2025).
Purchases of batteries from Fuzhou BAK: $294,374 (Q3 2025) and $301,445 (9 months 2025).
Purchases of materials from Zhejiang Shengyang: $1,278,400 (Q3 2025) and $5,063,306 (9 months 2025).
Sub-contracting services provided by Fuzhou BAK: $1,775,551 (Q3 2025) and $1,775,551 (9 months 2025).
Sales of cathode raw materials to Zhengzhou BAK: $4,932,488 (Q3 2025) and $10,966,505 (9 months 2025).
Sales of cathode raw materials to Zhengzhou BAK Electronics Co., Ltd: $327,434 (Q3 2025) and $795,963 (9 months 2025).
Deposit paid for acquisition of long-term investments in BAK SZ: $16,262,446 as of September 30, 2025.
Trade receivable from Zhengzhou BAK: $5,615,672 as of September 30, 2025.
Trade payable to Zhejiang Shengyang: $1,644,800 as of September 30, 2025.
Trade payable to Fuzhou BAK: $2,135,557 as of September 30, 2025.

Stakeholder Impact

Shareholders face potential dilution from future equity financing and significant risk due to the 'going concern' doubt and accumulated deficit.
Employees at Nanjing CBAK and CBAK Power have seen increased salaries and social insurance costs due to growing numbers on new production lines, indicating job creation in these segments.
Customers in the light electric vehicle sector are benefiting from increased sales volumes, particularly in international markets.
Customers in the residential energy supply & uninterruptible power supplies sector may experience disruptions or changes due to the Dalian facilities' product portfolio upgrade.
Suppliers, particularly those to Hitrans, are seeing increased demand for cathode materials due to Hitrans's market expansion and new customer acquisition.
Creditors face elevated risk due to the company's working capital deficiency and significant short-term debt obligations, which contribute to the 'going concern' doubt.

Next Steps

Continue expanding production lines and manufacturing capacity in Dalian, Nanjing, Zhejiang, and Anhui facilities.
Complete the product portfolio upgrade at Dalian facilities, transitioning from Model 26650 to Model 40135 batteries.
Raise additional funds through bank borrowings and equity financing to address liquidity needs and fund expansion.
Renew existing loans upon maturity.
Remediate identified material weaknesses in internal control over financial reporting, including hiring a permanent Chief Financial Officer and providing financial personnel training on US GAAP and internal control.
Continue negotiations for the potential postponement of payment and equity transfer for the Follow-on Acquisition of Zhejiang Shengyang.
Monitor and assess the evolving situation regarding potential health epidemics and outbreaks.

Key Dates

Date	Description
1999-10-04	CBAK Energy Technology, Inc. (formerly Medina Copy, Inc.) was formed in Nevada.
2005-01-20	Company completed a share swap transaction with shareholders of BAK International, accounted for as a capital-raising transaction.
2006-08-15	SEC declared effective a post-effective amendment terminating a resale registration statement on Form SB-2.
2007-11-09	Company completed a private placement for gross proceeds of $13,650,000 by selling 3,500,000 shares of common stock.
2008-05-07	Registration statement on Form S-3, filed on December 21, 2007, was declared effective by the SEC.
2013-08-14	Dalian BAK Trading Co., Ltd (later CBAK New Energy) was established as a wholly owned subsidiary.
2013-12-27	Dalian BAK Power Battery Co., Ltd (later CBAK Power) was established as a wholly owned subsidiary.
2014-10-17	Company received a subsidy of RMB46,150,000 for land use rights and construction of a new manufacturing site in Dalian.
2018-05-04	CBAK New Energy (Suzhou) Co., Ltd (CBAK Suzhou) was established as a 90% owned subsidiary of CBAK Power.
2019-11-21	Dalian CBAK Energy Technology Co., Ltd (CBAK Energy) was established as a wholly owned subsidiary.
2020-07-14	Company acquired BAK Asia Investments Limited (BAK Investments) from former CEO Mr. Xiangqian Li.
2020-07-31	BAK Investments formed a wholly owned subsidiary CBAK New Energy (Nanjing) Co., Ltd. (CBAK Nanjing).
2020-08-06	Nanjing CBAK New Energy Technology Co., Ltd. (Nanjing CBAK) was established as a wholly owned subsidiary of CBAK Nanjing.
2020-11-09	Nanjing Daxin New Energy Automobile Industry Co., Ltd (later Nanjing BFD) was established as a wholly owned subsidiary of CBAK Nanjing.
2020-12-08	Company entered into a securities purchase agreement for a registered direct offering of common stock and warrants, raising $49.16 million.
2021-02-08	Company entered into another securities purchase agreement for a registered direct offering and concurrent private placement, raising $70 million.
2021-04-21	CBAK Power entered into an investment agreement for Hunan DJY Technology Co., Ltd (DJY).
2021-07-20	CBAK Power entered into a framework agreement to acquire 81.56% of Zhejiang Hitrans Lithium Battery Technology Co., Ltd (Hitrans).
2021-11-26	Acquisition of Hitrans by CBAK Power was completed.
2021-11-29	Compensation Committee granted options for 2,750,002 share units to employees, officers, and directors.
2022-07-08	Hitrans held a shareholder meeting to increase registered capital and accept investments from Shaoxing Haiji and Mr. Haijun Wu.
2022-08-31	Nanjing CBAK, Guangxi Guiwu Recycle Resources Company Limited, and Mr. Weidong Xu entered into an investment agreement to jointly set up Guangxi Guiwu CBAK New Energy Technology Co., Ltd.
2022-11-28	Nanjing CBAK, Shenzhen Education for Industry Investment Co., Ltd., and Wenyuan Liu set up Nanjing CBAK Education For Industry Technology Co., Ltd.
2022-12-08	CBAK Power entered into equity interest transfer agreements to dispose of 6.82% of Hitrans equity interests.
2023-04-11	Compensation Committee granted 894,000 restricted share units and 2,124,000 options to employees, officers, and directors.
2023-08-22	Compensation Committee granted 40,000 restricted share units and 160,000 options to employees.
2023-09-27	Nanjing CBAK entered into an Equity Transfer Agreement with Shenzhen BAK Battery Co., Ltd. (SZ BAK) to acquire a 5% equity interest in BAK SZ.
2023-09-27	Hitrans entered into an Equity Transfer Contract to initially acquire a 26% equity interest in Zhejiang Shengyang Renewable Resources Technology Co., Ltd.
2023-11-02	Company received a subsidy of RMB8.4 million for its development of a new production line.
2024-03-26	CBAK New Energy acquired 67.33% equity interest in Hitrans from CBAK Power.
2024-04-19	Nanjing CABK entered into an equity transfer agreement to dispose of its equity interest in Guangxi Guiwu.
2024-10-29	Shenzhen CBAK Sodium Battery New Energy Co., Ltd (CBAK Shenzhen) was established as a wholly owned subsidiary of BAK Investments.
2024-12-12	Hitrans received RMB11.42 million from Development and Reform Bureau of Shangyu District, Shaoxing for new production line development.
2025-01-09	Anhui Yuanchuang New Energy Materials Co., Ltd. (Yuanchuang) was established as a wholly owned subsidiary of Hitrans.
2025-03-07	Nanjing CBAK and SZ BAK entered into a supplemental agreement to extend the transaction period for the BAK SZ equity transfer.
2025-03-26	Hitrans received additional RMB20.3 million from Development and Reform Bureau of Shangyu District, Shaoxing for new production line development.
2025-04-30	Company established a subsidiary in Malaysia, CBAK ENERGY Lithium Battery Malaysia SDN. BHD. (CBAK Malaysia).
2025-05-20	Company authorized a stock repurchase program of up to $20 million, ending May 20, 2026.
2025-08-13	Company completed shares repurchase and retired repurchased shares under the Stock Repurchase Program.
2025-09-30	End of the quarterly period covered by this report.
2025-11-07	Number of shares outstanding of common stock was 88,645,836.
2025-11-10	Date of signing of the Quarterly Report on Form 10-Q.

Recommendation

strong sell

The filing presents a highly concerning financial picture, despite a quarterly revenue increase. The nine-month results show a dramatic shift from net income to a significant net loss and a severe 63% decline in gross profit. Critically, the company explicitly states 'substantial doubt about its ability to continue as a going concern' due to recurring losses, a large working capital deficiency, and substantial short-term debt. Furthermore, identified material weaknesses in internal controls and ineffective disclosure controls indicate significant governance and operational risks. While there are efforts to expand and remediate, the fundamental financial instability and the explicit going concern warning make this a 'strong sell' for any seasoned investor or institution, as the risk of capital loss is exceptionally high.

Keywords

Lithium-ion batteries, Sodium batteries, Electric vehicles, Light electric vehicles, Energy storage, Cathode materials, NCM precursor, China manufacturing, SEC 10-Q, Financial results, Going concern, Working capital deficiency, Internal controls, Production upgrade, Global markets

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