mvst-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to________________

Microvast Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-38826

83-2530757

(State or other jurisdiction
of incorporation or organization)

(Commission File Number)

(IRS Employer
Identification No.)


12603 Southwest Freeway, Suite 300 Stafford, Texas						77477
(Address Of Principal Executive Offices)						(Zip Code)

(281) 491-9505

(Registrant’s telephone number, including area code)


N/A
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common stock, par value $0.0001 per share

MVST

The Nasdaq Stock Market LLC

Redeemable warrants, exercisable for shares of common stock at an exercise price of $11.50 per share

MVSTW

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	o	Accelerated filer	x
Non-accelerated filer	o	Smaller reporting company	o
Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of May 5, 2023, there were 309,427,448 shares of the Company’s common stock, par value $0.0001, issued and outstanding.

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MICROVAST HOLDINGS, INC.

FORM 10-Q

For the Quarter Ended March 31, 2023

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		Page
PART I. FINANCIAL INFORMATION		1

Item 1.	Financial Statements (Unaudited)	1

	Unaudited Condensed Consolidated Balance Sheets	1

	Unaudited Condensed Consolidated Statements of Operations	3

	Unaudited Condensed Consolidated Statements of Comprehensive Loss	4

	Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity	5

	Unaudited Condensed Consolidated Statements of Cash Flows	6

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION		36

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	36

Item 3.	Defaults Upon Senior Securities	36

Item 4.	Mine Safety Disclosures	36

Item 5.	Other Information	36

Item 6.	Exhibits	37

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report ("Report") contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about future financial and operating results, our objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “objective,” “plan,” “project,” “predict,” “outlook” “should,” “will,” “would,” or the negative of these terms, or other comparable terminology intended to identify statements about the future. These forward-looking statements include, but are not limited to, statements regarding our industry and market sizes, and future opportunities for us. Such forward-looking statements are based upon the current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.

In addition to factors identified elsewhere in this Report, the following factors, among others, could cause actual results and the timing of events to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

•changes in the highly competitive market in which we compete, including with respect to our competitive landscape, technology evolution or regulatory changes;

•risk that we may not be able to execute our growth strategies or achieve profitability;

•risks of operations in China;

•the impact of inflation;

•changes in availability and price of raw materials;

•changes in the markets that we target;

•heightened awareness of environmental issues and concern about global warming and climate change;

•risk that we are unable to secure or protect our intellectual property;

•risk that our customers or third-party suppliers are unable to meet their obligations fully or in a timely manner;

•risk that our customers will adjust, cancel or suspend their orders for our products;

•risk that we will need to raise additional capital to execute our business plan, which may not be available on acceptable terms or at all;

•risk of product liability or regulatory lawsuits or proceedings relating to our products or services;

•economic, financial and other impacts of the coronavirus (“COVID-19”) pandemic, including global supply chain disruptions; and

•the conflict between Russia and Ukraine and any restrictive actions that have been or may be taken by the U.S. and/or other countries in response thereto, such as sanctions or export controls.

The foregoing list of factors is not exhaustive and new factors may emerge from time to time that could also affect actual performance and results. For more information, please see the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2022 in Part I, Item 1A.

Actual results, performance or achievements may differ materially, and potentially adversely, from any forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance as forward-looking statements are based on

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estimates and assumptions that are inherently subject to various significant risks, uncertainties and other factors, many of which are beyond our control.

All information set forth herein speaks only as of the date hereof, and we disclaim any intention or obligation to update any forward-looking statements as a result of developments occurring after the date hereof except as may be required under applicable securities laws. Forecasts and estimates regarding our industry and end markets are based on sources we believe to be reliable, however there can be no assurance these forecasts and estimates will prove accurate in whole or in part.

iii

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)


	December 31, 2022		March 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	231,420	$	200,305
Restricted cash, current	70,732		60,164
Short-term investments	25,070		25,313
Accounts receivable (net of allowance for credit losses of $4,407 and $3,270 as of December 31, 2022 and March 31, 2023, respectively)	119,304		88,911
Notes receivable	2,196		21,202
Inventories, net	84,252		87,669
Prepaid expenses and other current assets	12,093		13,472
Total Current Assets	545,067		497,036
Restricted cash, non-current	465		11
Property, plant and equipment, net	335,140		443,051
Land use rights, net	12,639		12,618
Acquired intangible assets, net	1,636		3,691
Operating lease right-of-use assets	16,368		18,461
Other non-current assets	73,642		29,113
Total Assets	$	984,957	$	1,003,981

Liabilities
Current liabilities:
Accounts payable	$	44,985	$	41,243
Notes payable	68,441		67,804
Accrued expenses and other current liabilities	66,720		93,147
Advance from customers	54,207		53,059
Short-term bank borrowings	17,398		21,842
Income tax payables	658		658
Total Current Liabilities	252,409		277,753
Long-term bonds payable	43,888		43,888
Long-term bank borrowings	28,997		29,122
Warrant liability	126		109
Share-based compensation liability	131		138
Operating lease liabilities	14,347		15,825
Other non-current liabilities	32,082		31,317
Total Liabilities	$	371,980	$	398,152
Commitments and contingencies (Note 16)

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - continued

(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)


	December 31, 2022		March 31, 2023
Shareholders’ Equity
Common Stock (par value of US$0.0001 per share, 750,000,000 and 750,000,000 shares authorized as of December 31, 2022 and March 31, 2023; 309,316,011 and 309,427,448 shares issued, and 307,628,511 and 307,739,948 shares outstanding as of December 31, 2022 and March 31, 2023)	$	31	$	31
Additional paid-in capital	1,416,160		1,434,221
Statutory reserves	6,032		6,032
Accumulated deficit	(791,165)		(820,746)
Accumulated other comprehensive loss	(18,081)		(15,861)
Total Microvast Holding, Inc. shareholders’ equity	612,977		603,677
Noncontrolling interests	$	—	$	2,152
Total Equity	$	612,977	$	605,829
Total Liabilities and Equity	$	984,957	$	1,003,981

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)


	Three Months Ended March 31,
	2022		2023
Revenues	$	36,668	$	46,973
Cost of revenues	(36,655)		(42,115)
Gross profit	13		4,858
Operating expenses:
General and administrative expenses	(26,101)		(20,385)
Research and development expenses	(11,309)		(10,861)
Selling and marketing expenses	(5,998)		(4,988)
Total operating expenses	(43,408)		(36,234)
Subsidy income	137		77
Loss from operations	(43,258)		(31,299)
Other income and expenses:
Interest income	314		1,381
Interest expense	(796)		(459)
Changes in fair value of warrant liability	(435)		17
Other income, net	399		789
Loss before provision for income taxes	(43,776)		(29,571)
Income tax expense	—		—
Net loss	$	(43,776)	$	(29,571)
Less: net income attributable to noncontrolling interests	—		10
Net loss attributable to Microvast Holdings, Inc.'s shareholders	$	(43,776)	$	(29,581)
Net loss per common share
Basic and diluted	$	(0.15)	$	(0.10)
Weighted average shares used in calculating net loss per share of common stock
Basic and diluted	298,843,016		307,714,841

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)


	Three Months Ended March 31,
	2022		2023
Net loss	$	(43,776)	$	(29,571)
Foreign currency translation adjustment	986		2,188
Comprehensive loss	$	(42,790)	$	(27,383)
Comprehensive income attributable to non-controlling interests	—		(22)
Total comprehensive loss attributable to Microvast Holding, Inc.'s shareholders	$	(42,790)	$	(27,361)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(In thousands of U.S. dollars, except share and per share data, or as otherwise noted)


	Three Months Ended March 31, 2022
	Common Stock			Additional paid-in capital		Accumulated deficit		Accumulated other Comprehensive Income		Statutory reserves		Total Microvast Holdings, Inc. Shareholders’ Equity
	Shares	Amount

Balance as of December 31, 2021	298,843,016	$	30	$	1,306,034	$	(632,099)	$	6,701	$	6,032	$	686,698
Net loss	—	—		—		(43,776)		—		—