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What changed in Microvast Holdings, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Microvast Holdings, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+738 added−721 removedSource: 10-K (2025-03-31) vs 10-K (2024-04-01)

Top changes in Microvast Holdings, Inc.'s 2024 10-K

738 paragraphs added · 721 removed · 474 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

194 edited+92 added−108 removed92 unchanged
Biggest changeSEGMENT INFORMATION - continued Disaggregation of revenue Revenues, classified by major geographic regions in which the Group’s customers are located are as follows: Year ended December 31, Year ended December 31, Year ended December 31, Geographic regions 2021 2022 2023 Amount % Amount % Amount % PRC 93,326 61 % 132,469 65 % 156,480 51 % India 17,805 12 % 47,323 23 % 60,606 20 % Russia 12,213 8 % 305 — % — — % Other Asia & Pacific countries 8,172 5 % 4,938 2 % 2,047 1 % Asia & Pacific 131,516 86 % 185,035 90 % 219,133 72 % United Kingdom 11,386 7 % 3,976 2 % 3,510 1 % Italy 3,140 2 % 6,389 3 % 56,592 18 % Other European countries 5,016 4 % 5,444 3 % 24,256 8 % Europe 19,542 13 % 15,809 8 % 84,358 27 % United States 918 1 % 3,651 2 % 3,126 1 % Total 151,976 100 % 204,495 100 % 306,617 100 % 26.
Biggest changeSEGMENT INFORMATION - continued Long-lived assets, classified by major geographic regions are as follows: December 31, December 31, Geographic regions 2024 2023 Amount % Amount % PRC 290,512 59 % 304,380 48 % Asia & Pacific 290,512 59 % 304,380 48 % Germany 14,846 3 % 18,076 3 % United Kingdom 25 0 % 43 0 % Europe 14,871 3 % 18,119 3 % United States 184,177 38 % 310,152 49 % Total 489,560 100 % 632,651 100 % Disaggregation of revenue Revenues, classified by major geographic regions in which the Group’s customers are located are as follows: Year ended December 31, Year ended December 31, Year ended December 31, Geographic regions 2024 2023 2022 Amount % Amount % Amount % PRC 127,138 33 % 156,480 51 % 132,469 65 % India 48,767 13 % 60,606 20 % 47,323 23 % Other Asia & Pacific countries 1,791 0 % 2,047 1 % 5,243 2 % Asia & Pacific 177,696 46 % 219,133 72 % 185,035 90 % Italy 150,809 40 % 56,592 18 % 6,389 3 % Other European countries 36,909 10 % 27,766 9 % 9,420 5 % Europe 187,718 50 % 84,358 27 % 15,809 8 % United States 14,387 4 % 3,126 1 % 3,651 2 % Total 379,801 100 % 306,617 100 % 204,495 100 % 25.
Capped Non-vested share units The capped non-vested shares units ("CRSUs") represent rights for the holder to receive cash determined by the number of shares granted multiplied by the lower of the fair market value and the capped price, which will be settled in the form of cash payments. The CRSUs were accounted for as liability classified awards.
Capped Non-vested share units The capped non-vested share units ("CRSUs") represent rights for the holder to receive cash determined by the number of shares granted multiplied by the lower of the fair market value and the capped price, which will be settled in the form of cash payments. The CRSUs were accounted for as liability classified awards.
Deferred tax liability was not provided with respect to undistributed profits of relevant PRC subsidiaries for the years ended December 31, 2021, 2022 and 2023, as the Group concluded that profits generated by the relevant PRC subsidiaries are considered to be permanently reinvested, because the Group does not have any present plan to pay any cash dividends on its ordinary shares in the foreseeable future and intends to retain all of its available funds and any future earnings for use in the operation and expansion of its business.
Deferred tax liability was not provided with respect to undistributed profits of relevant PRC subsidiaries for the years ended December 31, 2024, 2023 and 2022, as the Group concluded that profits generated by the relevant PRC subsidiaries are considered to be permanently reinvested, because the Group does not have any present plan to pay any cash dividends on its ordinary shares in the foreseeable future and intends to retain all of its available funds and any future earnings for use in the operation and expansion of its business.
As of December 31, 2022 and 2023, based on the information currently available, the Group believes that any loss contingencies that may arise as a result of currently pending legal proceedings cannot be accurately quantified at this time and thus cannot determine whether they will have a material adverse effect on the Group’s business, results of operations, financial condition, and cash flows.
As of December 31, 2024 and December 31, 2023, based on the information currently available, the Group believes that any loss contingencies that may arise as a result of currently pending legal proceedings cannot be accurately quantified at this time and thus cannot determine whether they will have a material adverse effect on the Group’s business, results of operations, financial condition, and cash flows.
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Microvast Holdings, Inc. and its subsidiaries (the “ Company ”) as of December 31, 2022 and 2023, the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in Schedule I (collectively referred to as the “ financial statements ”).
Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Microvast Holdings, Inc. and its subsidiaries (the “ Company ”) as of December 31, 2024 and 2023, the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes and the schedule listed in Schedule I (collectively referred to as the “ financial statements ”).
Shareholders’ Equity Noncontrolling Interests Total Equity Balance as of December 31, 2022 307,628,511 $ 31 $ 1,416,160 $ (791,165) $ (18,081) $ 6,032 $ 612,977 $ — $ 612,977 Net loss — — — (106,336) — — (106,336) (76) (106,412) Capital contribution from noncontrolling interests — — — — — — — 2,174 2,174 Reduction of noncontrolling interest — — (164) — — — (164) (2,010) (2,174) Issuance of common stock in connection with vesting of share-based awards 7,378,431 1 (1) — — — — — — Share-based compensation(Note 22) — — 65,246 — — — 65,246 — 65,246 Foreign currency translation adjustments — — — — (7,533) — (7,533) (88) (7,621) Balance as of December 31, 2023 315,006,942 $ 32 $ 1,481,241 $ (897,501) $ (25,614) $ 6,032 $ 564,190 $ — $ 564,190 The accompanying notes are an integral part of these consolidated financial statements.
Shareholders’ Equity Noncontrolling Interests Total Equity Shares Amount Balance as of December 31, 2022 307,628,511 $ 31 $ 1,416,160 $ (791,165) $ (18,081) $ 6,032 $ 612,977 $ — $ 612,977 Net loss — — — (106,336) — — (106,336) (76) (106,412) Capital contribution from noncontrolling interests — — — — — — — 2,174 2,174 Reduction of noncontrolling interest — — (164) — — — (164) (2,010) (2,174) Issuance of common stock in connection with vesting of share-based awards 7,378,431 1 (1) — — — — — — Share-based compensation(Note 21) — — 65,246 — — — 65,246 — 65,246 Foreign currency translation adjustments — — — — (7,533) — (7,533) (88) (7,621) Balance as of December 31, 2023 315,006,942 $ 32 $ 1,481,241 $ (897,501) $ (25,614) $ 6,032 $ 564,190 $ — $ 564,190 The accompanying notes are an integral part of these consolidated financial statements.
MPS was recognized as a “New and High Tech Enterprise” (“NHTE”) by the relevant PRC government authorities in 2018 and 2021. Therefore, MPS, as the NHTE, is entitled to an income tax rate of 15% for 2021, 2022 and 2023. Huzhou Hongwei New Energy Automobile Co., Ltd.
MPS was recognized as a “New and High Tech Enterprise” (“NHTE”) by the relevant PRC government authorities in 2021 and 2024. Therefore, MPS, as the NHTE, is entitled to an income tax rate of 15% for 2024, 2023 and 2022. Huzhou Hongwei New Energy Automobile Co., Ltd.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
The Warrants entitle the holder to purchase one share of the Company’s Common Stock at an exercise price of $11.50 per share. During the year ended December 31, 2023, none of the Public Warrants or the Private Warrants have been exercised. The Public Warrants became exercisable 30 days after the completion of the Merger.
The Warrants entitle the holder to purchase one share of the Company’s Common Stock at an exercise price of $11.50 per share. During the year ended December 31, 2024, none of the Public Warrants or the Private Warrants have been exercised. The Public Warrants became exercisable 30 days after the completion of the Merger.
For performance-based awards with a market condition, such as awards based on total shareholder return (“TSR”), compensation expense is recognized on a straight-line basis over the estimated service period of the award, regardless of whether the market condition is satisfied. Forfeitures are recognized as they occur.
For performance-based awards with a market condition, such as awards based on total stockholder return (“TSR”), compensation expense is recognized on a straight-line basis over the estimated service period of the award, regardless of whether the market condition is satisfied. Forfeitures are recognized as they occur.
The Company’s share of income from its subsidiaries were reported as equity in earnings of subsidiaries in the accompanying parent company financial statements. Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
The Company’s share of income from its subsidiaries were reported as equity in earnings of subsidiaries in the accompanying parent company financial statements. F-53 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 7.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 7.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 14.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 14.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 16.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 16.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 16.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 16.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 18.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 18.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 28.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 28.
COMMITMENTS AND CONTINGENCIES - continued The Company and certain of its officers and directors have also been named as defendants in three derivative actions filed in the Southern District of Texas under the captions Bhavsar v. Wu et al. , No. 4:24-cv-00372 (S.D. Tex.) (filed Jan. 31, 2024), Marti et al v. Wu et al , Case No. 4:24-cv-00633 (S.D.
The Company and certain of its officers and directors have also been named as defendants in three derivative actions filed in the Southern District of Texas under the captions Bhavsar v. Wu et al. , No. 4:24-cv-00372 (S.D. Tex.) (filed Jan. 31, 2024), Marti et al v. Wu et al , Case No. 4:24-cv-00633 (S.D.
(“Hongwei”) was recognized as a NHTE by the relevant PRC government authorities in 2020 and 2023, and it is entitled to an income tax rate of 15% for 2021, 2022 and 2023.
(“Hongwei”) was recognized as a NHTE by the relevant PRC government authorities in 2020 and 2023, and it is entitled to an income tax rate of 15% for 2024, 2023 and 2022.
The following table summarizes net revenues from customers that accounted for 10% or more of the Group’s net revenues for 2021, 2022 and 2023: December 31, 2021 December 31, 2022 December 31, 2023 Percentage of revenue contributed by Customer A *% *% 18 % Percentage of revenue contributed by Customer B *% *% 11 % Percentage of revenue contributed by Customer C 11 % 12 % *% *Revenue from such customer represented less than 10% of the Group's revenue during the respective periods.
The following table summarizes net revenues from customers that accounted for 10% or more of the Group’s net revenues for 2024, 2023 and 2022: December 31, 2024 December 31, 2023 December 31, 2022 Percentage of revenue contributed by Customer A 39 % 18 % *% Percentage of revenue contributed by Customer B *% 11 % *% Percentage of revenue contributed by Customer C *% *% 12 % *Revenue from such customer represented less than 10% of the Group's revenue during the respective periods.
The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the options. F-38 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 22.
The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the options. F-38 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 21.
Recent accounting pronouncements not yet adopted In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"). ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provide new segment disclosure requirements for entities with a single reportable segment.
Recent accounting pronouncements newly adopted In November 2023, the FASB issued ASU 2023-07 "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures" ("ASU 2023-07"). ASU 2023-07 intends to improve reportable segment disclosure requirements, enhance interim disclosure requirements and provide new segment disclosure requirements for entities with a single reportable segment.
All intercompany transactions and balances have been eliminated upon consolidation. F-12 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
All intercompany transactions and balances have been eliminated upon consolidation. F-14 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
Germany German enterprise income tax, which is a combination of corporate income tax and trade tax, is calculated at an average tax rate of 29.1%, 27.9% and 29.9% for the years ended December 31, 2021, 2022 and 2023, respectively, for the Company’s subsidiary located in Germany in accordance with relevant tax rules and regulations in Germany.
INCOME TAXES - continued Germany German enterprise income tax, which is a combination of corporate income tax and trade tax, is calculated at an average tax rate of 29.1%, 29.9% and 27.9% for the years ended December 31, 2024, 2023 and 2022, respectively, for the Company’s subsidiary located in Germany in accordance with relevant tax rules and regulations in Germany.
Share-based compensation Share-based payment transactions with employees are measured based on the grant date fair value of the equity instrument and recognized as compensation expense on a straight-line basis over the requisite service period, with a corresponding impact reflected in additional paid-in capital.
SIGNIFICANT ACCOUNTING POLICIES - continued Share-based compensation Share-based payment transactions with employees are measured based on the grant date fair value of the equity instrument and recognized as compensation expense on a straight-line basis over the requisite service period, with a corresponding impact reflected in additional paid-in capital.
The Private Warrants were valued using the following assumptions under the Monte Carlo Model that assumes optimal exercise of the Company’s redemption option at the earliest possible date: December 31, 2023 Market price of public stock $ 1.40 Exercise price $ 11.50 Expected term (years) 2.57 Volatility 75.07 % Risk-free interest rate 4.01 % Dividend rate 0.00 % The market price of public stock is the quoted market price of the Company’s Common Stock as of the valuation date.
The Private Warrants were valued using the following assumptions under the Monte Carlo Model that assumes optimal exercise of the Company’s redemption option at the earliest possible date: December 31, 2024 Market price of public stock $ 2.07 Exercise price $ 11.50 Expected term (years) 1.57 Volatility 113.75 % Risk-free interest rate 4.13 % Dividend rate 0.00 % The market price of public stock is the quoted market price of the Company’s Common Stock as of the valuation date.
F-11 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 1.
F-13 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 1.
F-13 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
F-16 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
F-17 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
F-20 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
F-21 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
F-37 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 21.
For the years ended December 31, 2021, 2022 and 2023, 12%, 18% and 15% of our raw materials were purchased through company E and F, respectively, although numerous alternate sources of supply are readily available on comparable terms for the raw materials supplied by company E and F.
For the years ended December 31, 2024, 2023 and 2022, 19%, 15% and 18% of our raw materials were purchased through company E, E and F, respectively, although numerous alternate sources of supply are readily available on comparable terms for the raw materials supplied by company E and F.
Land use rights are amortized on a straight-line basis for 50 years or shorter of the estimated usage periods or the terms of the land use rights agreements. The Group recorded amortization expenses of $325, $310 and $294 for the years ended December 31, 2021, 2022 and 2023, respectively.
Land use rights are amortized on a straight-line basis for 50 years or shorter of the estimated usage periods or the terms of the land use rights agreements. The Group recorded amortization expenses of $291, $294 and $310 for the years ended December 31, 2024, 2023 and 2022, respectively.
Additionally, in no event will the Company be required to net cash settle the Warrants. The Private Warrant liability was measured at fair value, resulting in gains of $979 and $59 for the years ended December 31, 2022 and December 31, 2023, respectively. This was classified within changes in fair value of warrant liability in the consolidated statements of operations.
Additionally, in no event will the Company be required to net cash settle the Warrants. The Private Warrant liability was measured at fair value, resulting in (loss)/gain of $(223), $59 and $979 for the years ended December 31, 2024, 2023 and 2022, respectively. This was classified within changes in fair value of warrant liability in the consolidated statements of operations.
For the Company’s subsidiaries located in the PRC, the functional currency is the Chinese Renminbi (“RMB”); the Company’s UK subsidiary, MP UK, the functional currency is the Great British Pound (“Pound”); the Company’s Germany subsidiary, MV GmbH, the functional currency is the Euro, and the Company’s Singapore subsidiary, MV Singapore, the functional currency is the Singapore Dollar (“SGD”).
For the Company’s subsidiaries located in the PRC, the functional currency is the Chinese Renminbi (“RMB”); the Company’s UK subsidiary, MP UK, the functional currency is the Great British Pound (“Pound”); and the Company’s Germany subsidiary, MV GmbH, the functional currency is the Euro.
In December 2023, the FASB issued ASU 2023-09 "Improvements to Income Tax Disclosures" ("ASU 2023-09"). ASU 2023-09 intends to improve the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively.
ASU 2023-09 intends to improve the transparency of income tax disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 and is to be adopted on a prospective basis with the option to apply retrospectively.
The Group has also entered into short-term loan agreements and bank facilities with Chinese banks. The original terms of the loans from Chinese banks are within 12 months and the interest rates range from 3.40% to 4.55% per annum .
The Group has also entered into short-term loan agreements and bank facilities with Chinese banks. The original terms of the loans from Chinese banks are within 12 months and the interest rates range from 3.25% to 4.85% per annum .
Pursuant to the Company's governing documents and indemnification agreements entered into by the Company with certain of the named defendants, in the above-described actions, the Company has indemnified those defendants for all expenses and losses related to the litigation subject to the terms of those indemnification agreements.
COMMITMENTS AND CONTINGENCIES - continued Litigation - continued Securities Litigation - continued Pursuant to the Company's governing documents and indemnification agreements entered into by the Company with certain of the named defendants, in the above-described actions, the Company has indemnified those defendants for all expenses and losses related to the litigation subject to the terms of those indemnification agreements.
Concentration of credit risk Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, accounts receivable, notes receivable and short-term investments. The Group places its cash and cash equivalents with financial institutions with high credit ratings and quality.
SIGNIFICANT ACCOUNTING POLICIES - continued Concentration of credit risk Financial instruments that potentially expose the Group to concentrations of credit risk consist primarily of cash and cash equivalents, restricted cash, accounts receivable, notes receivable and short-term investments. The Group places its cash and cash equivalents with financial institutions with high credit ratings and quality.
Other Matters The Company and Microvast Energy have been named as defendants in a litigation filed in the Chancery Court for the State of Tennessee under the caption Stoncor Group, Inc. v. Microvast, Inc., et al , Case No. CD-24-12 (Tenn. Ch.) (filed Mar. 18, 2024).
Other Matters The Company and Microvast Energy, Inc. (“MV Energy”), a subsidiary of the Company, have been named as defendants in a litigation filed in the Montgomery County Chancery Court for the State of Tennessee under the caption Stoncor Group, Inc. v. Microvast, Inc., et al , Case No. CD-24-12 (Tenn. Ch.) (filed Mar. 18, 2024).
Table of Contents ADDITIONAL INFORMATION FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY NOTES OF THE CONDENSED FINANCIAL STATEMENTS 1.
F-52 Table of Contents ADDITIONAL INFORMATION FINANCIAL STATEMENT SCHEDULE I CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY NOTES OF THE CONDENSED FINANCIAL STATEMENTS 1.
At the CRSU Modification date, the Company used the Monte Carlo valuation model in determining the fair value of the CRSUs with assumptions as follows: Modification Date Expected term (years) 0.07 ~ 2.07 Volatility 50.93 % ~ 73.89% Risk-free interest rate 1.15 % ~ 3.05% Expected dividend yields 0.00% Expected term was the time left (in years) from the CRSU Modification date to the vesting date based on the terms of the applicable award agreements.
SHARE-BASED PAYMENT - continued Capped Non-vested share units - continued At the CRSU Modification date, the Company used the Monte Carlo valuation model in determining the fair value of the CRSUs with assumptions as follows: Modification Date Expected term (years) 0.07 ~ 2.07 Volatility 50.93 % ~ 73.89% Risk-free interest rate 1.15 % ~ 3.05% Expected dividend yields 0.00% Expected term was the time left (in years) from the CRSU Modification date to the vesting date based on the terms of the applicable award agreements.
F-7 Table of Contents MICROVAST HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT)/EQUITY - Continued (In thousands of U.S. dollars, except share and per share data, or otherwise noted) Year Ended December 31, 2022 Common Stock Shares Amount Additional paid-in capital Accumulated deficit Accumulated other comprehensive income/(loss) Statutory reserve Total Microvast Holdings, Inc.
F-9 Table of Contents MICROVAST HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - Continued (In thousands of U.S. dollars, except share and per share data, or otherwise noted) Year Ended December 31, 2023 Common Stock Additional paid-in capital Accumulated deficit Accumulated other comprehensive income/(loss) Statutory reserve Total Microvast Holdings, Inc.
F-8 Table of Contents MICROVAST HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT)/EQUITY - Continued (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) Year Ended December 31, 2023 Common Stock Shares Amount Additional paid-in capital Accumulated deficit Accumulated other Comprehensive (loss) /income Statutory reserves Total Microvast Holdings, Inc.
F-8 Table of Contents MICROVAST HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (In thousands of U.S. dollars, except share and per share data, or otherwise noted) Year Ended December 31, 2024 Common Stock Additional paid-in capital Accumulated deficit Accumulated other Comprehensive (loss) /income Statutory reserves Total Microvast Holdings, Inc.
Significant accounting estimates reflected in the Group’s financial statements include allowance for credit losses, provision for obsolete inventories, impairment of long-lived assets, valuation allowance for deferred tax assets, product warranties, fair value measurement of Bridge Notes, fair value measurement of warrant liability and share based compensation.
Significant accounting estimates reflected in the Group’s financial statements include allowance for credit losses, provision for obsolete inventories, impairment of property, plant and equipment, valuation allowance for deferred tax assets, product warranties, fair value measurement of Bridge Notes, fair value measurement of warrant liability and share based compensation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 3.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 5.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 2.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 10.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 4.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 18.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 11.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 25.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 12.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 28.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 17.
Cash and cash equivalents and restricted cash are classified within Level 1 of the fair value hierarchy because they are valued based on the quoted market price in an active market. The fair value of the warrant liability is based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.
Cash and cash equivalents and restricted cash are classified within Level 1 of the fair value hierarchy because they are valued based on the quoted market price in an active market. The fair value of the warrant liability and convertible loan with shareholder are based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.
A provision for income tax of $—, $33, and $10 has been recognized for the years ended December 31, 2021, 2022 and 2023, respectively.
A provision for income tax of nil, $10, and $33 has been recognized for the years ended December 31, 2024, 2023 and 2022, respectively.
Noncontrolling interests For the Company’s consolidated subsidiaries, noncontrolling interests are recognized to reflect the portion of their equity that is not attributable, directly or indirectly, to the Company as the controlling shareholder.
SIGNIFICANT ACCOUNTING POLICIES - continued Noncontrolling interests For the Company’s consolidated subsidiaries, noncontrolling interests are recognized to reflect the portion of their equity that is not attributable, directly or indirectly, to the Company as the controlling shareholder.
Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
SIGNIFICANT ACCOUNTING POLICIES - continued Fair value - continued Authoritative literature provides a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
COMMITMENTS AND CONTINGENCIES - continued Pledged assets Other than the pledges disclosed in Note 12, the Group may pledge certain assets to banks to secure the issuance of bank acceptance notes for the Group.
Pledged assets Other than the pledges disclosed in Note 12, the Group may pledge certain assets to banks to secure the issuance of bank acceptance notes for the Group.
Short-term investments The Group’s short-term held-to-maturity investments are classified based on their contractual maturity dates which are less than one year and are recorded at their amortized costs. The Company recognized $—, $70 and $438 interest income from the short-term investments for the years ended December 31, 2021, 2022 and 2023, respectively.
SIGNIFICANT ACCOUNTING POLICIES - continued Short-term investments The Group’s short-term held-to-maturity investments are classified based on their contractual maturity dates which are less than one year and are recorded at their amortized costs. The Company recognized $3, $438 and $70 interest income from the short-term investments for the years ended December 31, 2024, 2023 and 2022, respectively.
F-30 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 15.
F-35 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 18.
F-37 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2021, 2022 AND 2023 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 22.
F-44 Table of Contents MICROVAST HOLDINGS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2024, 2023 AND 2022 (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) 27.
The following assumptions were used for the respective periods below to calculate the fair value of common shares to be issued under TSR awards on the date of grant using the Monte Carlo pricing model: Year Ended December 31, 2022 2023 Expected term (years) 2.68 2.92 Volatility 59.50 % 61.89 % Risk-free interest rate 2.72 % 3.83 % Expected dividend yields 0.00 % 0.00 % Expected term was derived based on the remaining time from the grant date through the end of the performance period.
SHARE-BASED PAYMENT - continued Restricted Stock Units - continued The following assumptions were used for the respective periods below to calculate the fair value of common shares to be issued under TSR awards on the date of grant using the Monte Carlo pricing model: Year Ended December 31, 2023 Expected term (years) 2.92 Volatility 61.89 % Risk-free interest rate 3.83 % Expected dividend yields 0.00 % Expected term was derived based on the remaining time from the grant date through the end of the performance period.
The Company is reviewing the demands. Securities Litigation The Company and certain of its officers have also been named as defendants in a putative class action complaint by a shareholder of the Company in the U.S. District Court for the Southern District of Texas under the caption Schelling v. Microvast Holdings, Inc., Case No. 4:23-cv-04565 (S.D.
Securities Litigation The Company and certain of its officers have also been named as defendants in a putative class action complaint by a shareholder of the Company in the U.S. District Court for the Southern District of Texas under the caption Schelling v. Microvast Holdings, Inc., Case No. 4:23-cv-04565 (S.D. Tex.) (filed Dec. 5, 2023) (the "Schelling Action").
Risk-free interest rate was estimated based on the market yield of US Government Bond with maturity close to the expected term of the options, plus country risk spread. The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the options.
The risk-free interest rate was estimated based on the market yield of US Government Bond with maturity close to the expected term of the warrants. The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the warrants.
(“ MV Energy ”) Colorado, USA July 2022 100 % The Company and its subsidiaries (collectively, the “Group”) are primarily engaged in developing, manufacturing, and selling lithium-ion battery technologies for use in commercial electric vehicles and battery energy storage systems across the globe. 2.
(“ Hongwei ”) Huzhou, PRC December 2016 100 % Microvast Energy, Inc. (“ MV Energy ”) Colorado, USA July 2022 100 % The Company and its subsidiaries (collectively, the “Group”) are primarily engaged in developing, manufacturing, and selling lithium-ion battery technologies for use in commercial electric vehicles and battery energy storage systems across the globe. 2.
The aggregate amount of paid-in capital and statutory reserves, which is the amount of net assets of the Group’s entities in the PRC (mainland) not available for distribution, were $523,087 and $528,337 as of December 31, 2022 and 2023, respectively. 25.
The aggregate amount of paid-in capital and statutory reserves, which is the amount of net assets of the Group’s entities in the PRC (mainland) not available for distribution, were $528,337 and $528,337 as of December 31, 2024 and 2023, respectively. 24.
(the “2012 Plan”) were rolled over by removing original performance conditions and converting into options and capped non-vested share units with modified vesting schedules, using the Common Exchange Ratio of 160.3, as described in Note 3.
(the “2012 Plan”) were rolled over by removing original performance conditions and converting into options and capped non-vested share units with modified vesting schedules, using the ratio of 160.3.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) Year Ended December 31, 2021 2022 2023 Net loss $ (206,483) $ (158,200) $ (106,412) Foreign currency translation adjustment (655) (24,782) (7,621) Comprehensive loss $ (207,138) $ (182,982) $ (114,033) Comprehensive loss attributable to noncontrolling interests — — (164) Total comprehensive loss attributable to Microvast Holdings, Inc. $ (207,138) $ (182,982) $ (113,869) The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands of U.S. dollars, except share and per share data, or as otherwise noted) Year Ended December 31, 2024 2023 2022 Net loss $ (195,457) $ (106,412) $ (158,200) Foreign currency translation adjustment (12,580) (7,621) (24,782) Comprehensive loss $ (208,037) $ (114,033) $ (182,982) Comprehensive loss attributable to noncontrolling interests — (164) — Total comprehensive loss attributable to Microvast Holdings, Inc. $ (208,037) $ (113,869) $ (182,982) The accompanying notes are an integral part of these consolidated financial statements.
The 2021 Plan reserved 5% of the fully-diluted shares of Common Stock outstanding immediately following the Closing Date plus the shares underlying awards rolled over from the 2012 Plan for issuance in accordance with the 2021 Plan’s terms. As of December 31, 2023, 16,729,872 shares of Common Stock was available for grant under the 2021 Plan.
The 2021 Plan reserved 5% of the fully-diluted shares of Common Stock outstanding immediately following the Closing Date plus the shares underlying awards rolled over from the 2012 Plan for issuance in accordance with the 2021 Plan’s terms. As of December 31, 2024, 15,608,278 shares of Common Stock was available for grant under the 2021 Plan.
When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. F-18 Table of Contents MICROVAST HOLDINGS, INC.
Chinese labor regulations require the Group to accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were $2,774, $3,370 and $3,552 for the years ended December 31, 2021, 2022 and 2023, respectively. 24.
Chinese labor regulations require the Group to accrue for these benefits based on certain percentages of the employees’ salaries. The total provisions for such employee benefits were $5,012, $3,552 and $3,370 for the years ended December 31, 2024, 2023 and 2022, respectively. 23.
NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per share for the years indicated: Year Ended December 31, 2021 2022 2023 Numerator: Net loss attributable to Common Stock shareholders $ (234,103) $ (158,200) $ (106,336) Denominator: Weighted average Common Stock outstanding used in computing basic and diluted net loss per share 185,896,482 303,279,188 310,909,379 Basic and diluted net loss per share $ (1.26) $ (0.52) $ (0.34) For the years ended December 31, 2021, 2022 and 2023, the following Common Stock outstanding were excluded from the calculation of diluted net loss per share, as their inclusion would have been anti-dilutive for the years prescribed.
NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per share for the years indicated: Year Ended December 31, 2024 2023 2022 Numerator: Net loss attributable to Common Stock shareholders $ (195,457) $ (106,336) $ (158,200) Denominator: Weighted average Common Stock outstanding used in computing basic and diluted net loss per share 318,462,843 310,909,379 303,279,188 Basic and diluted net loss per share $ (0.61) $ (0.34) $ (0.52) For the years ended December 31, 2024, 2023 and 2022, the following Common Stock outstanding were excluded from the calculation of diluted net loss per share, as their inclusion would have been anti-dilutive for the years prescribed.
The Company, the directors of Company predecessor, Tuscan, and certain former and current Company officers and directors have also been named as defendants in a litigation filed in the Court of Chancery captioned Denish Bhavsar v. Stephen Vogel, et al. , Case No. 2024-0137-PAF (Del. Ch.) (filed Feb. 14, 2024).
COMMITMENTS AND CONTINGENCIES - continued Litigation - continued Corporate Governance Actions - continued The Company, the directors of Company predecessor, Tuscan, and certain former and current Company officers and directors have also been named as defendants in a litigation filed in the Court of Chancery captioned Denish Bhavsar v. Stephen Vogel, et al. , Case No. 2024-0137-PAF (Del.
The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.
Therefore, the accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern. F-15 Table of Contents MICROVAST HOLDINGS, INC.
The applicable interest rate will be increased to 12% if the Group is in default on the repayment of the bonds at the due date. The remaining terms and conditions of the convertible bonds were unchanged.
The applicable interest rate will be increased to 12% if the Group is in default on the repayment of the bonds at the due date. The remaining terms and conditions of the convertible bonds were unchanged. The Company has fully complied with the amended repayment schedule.
The modified CRSUs were accounted for as an equity award going forward from the date of the CRSU Modification with compensation expenses recognized for each tranche at the fair value measured on the modification date.
The modified CRSUs were accounted for as an equity award going forward from the date of the CRSU Modification with compensation expenses recognized for each tranche at the fair value measured on the modification date. F-39 Table of Contents MICROVAST HOLDINGS, INC.
ACCOUNTS RECEIVABLE Accounts receivable consisted of the following: December 31, 2022 December 31, 2023 Accounts receivable $ 123,711 $ 143,288 Allowance for credit losses (4,407) (4,571) Accounts receivable, net $ 119,304 $ 138,717 Movement of allowance for credit losses was as follows: Year Ended December 31, 2021 2022 2023 Balance at beginning of the period $ 5,047 $ 5,005 $ 4,407 Cumulative-effect adjustment upon adoption of ASU2016-13 , Financial instruments- Credit losses (Topic 326) — 866 — Charge of expenses 721 1,640 236 Write off (849) (2,631) (128) Recoveries of credit losses — — 121 Exchange difference 86 (473) (65) Balance at end of the period $ 5,005 $ 4,407 $ 4,571 F-24 Table of Contents MICROVAST HOLDINGS, INC.
ACCOUNTS RECEIVABLE Accounts receivable consisted of the following: December 31, 2024 December 31, 2023 Accounts receivable $ 125,716 $ 143,288 Allowance for credit losses (5,090) (4,571) Accounts receivable, net $ 120,626 $ 138,717 Movement of allowance for credit losses was as follows: Year Ended December 31, 2024 2023 2022 Balance at beginning of the period $ 4,571 $ 4,407 $ 5,005 Cumulative-effect adjustment upon adoption of ASU2016-13 , Financial instruments- Credit losses (Topic 326) — — 866 Charge of expenses 3,743 236 1,640 Write off (3,125) (128) (2,631) Recoveries of credit losses — 121 — Exchange difference (99) (65) (473) Balance at end of the period $ 5,090 $ 4,571 $ 4,407 F-24 Table of Contents MICROVAST HOLDINGS, INC.
No. 2023-1245-PAF. On March 18, 2024, the Court of Chancery granted the petition, validating and declaring effective each Act as of the time and date such Act was originally taken.
No. 2023-1245-PAF. On March 18, 2024, the Court of Chancery granted the petition, validating and declaring effective each Act as of the time and date such Act was originally taken. F-45 Table of Contents MICROVAST HOLDINGS, INC.
Report of Independent Registered Public Accounting Firm F - 2 Consolidated Balance Sheets as of December 31, 202 2 and 202 3 F- 3 Consolidated Statements of Operations for the Years Ended December 31, 202 1 , 202 2 and 202 3 F- 5 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 202 1 , 202 2 and 202 3 F- 6 Consolidated Statements of Changes in Shareholders’ (Deficit)/Equity for the Years Ended December 31, 20 21 , 202 2 and 202 3 F- 7 Consolidated Statements of Cash Flows for the Years Ended December 31, 202 1 , 202 2 and 202 3 F- 10 Notes to Consolidated Financial Statements F- 12 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Microvast Holdings, Inc.
Report of Independent Registered Public Accounting Firm F - 2 Consolidated Balance Sheets as of December 31, 2024 and 2023 F- 5 Consolidated Statements of Operations for the Years Ended December 31, 2024, 2023 and 2022 F- 7 Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2024, 2023 and 2022 F- 8 Consolidated Statements of Changes in Shareholders’ (Deficit)/Equity for the Years Ended December 31, 2024, 2023 and 2022 F- 9 Consolidated Statements of Cash Flows for the Years Ended December 31, 2024, 2023 and 2022 F- 12 Notes to Consolidated Financial Statements F- 14 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Microvast Holdings, Inc.
Basic and diluted $ (1.26) $ (0.52) $ (0.34) Weighted average shares used in calculating net loss per share of common stock: Basic and diluted 185,896,482 303,279,188 310,909,379 The accompanying notes are an integral part of these consolidated financial statements. F-5 Table of Contents MICROVAST HOLDINGS, INC.
Basic and diluted $ (0.61) $ (0.34) $ (0.52) Weighted average shares used in calculating net loss per share of common stock: Basic and diluted 318,462,843 310,909,379 303,279,188 The accompanying notes are an integral part of these consolidated financial statements. F-7 Table of Contents MICROVAST HOLDINGS, INC.
The plaintiff alleges that the Company failed to pay it for construction work that it performed on a Microvast Energy facility in Tennessee, and seeks damages of $1,251, plus certain fees and expenses, and foreclosure on the facility to satisfy the payment allegedly owed. The Group is also involved in other litigation, claims, and proceedings.
The plaintiff alleges that the Company failed to pay it for construction work that it performed on a Microvast facility in Tennessee, and seeks damages of $1,251, plus certain fees and expenses, and foreclosure on the facility to satisfy the payment allegedly owed.
We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

188 edited+99 added−72 removed339 unchanged
Biggest changeWu beneficially owns at least 10% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • the limitation that directors on the Board may only be removed for a cause and only upon the affirmative vote of the holders of at least a majority of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, voting together as a single class; • the election that the Company will not be governed by Section 203 of the DGCL, which will prohibit the Company from taking certain actions involving an “interested stockholder” for a certain period of time; 47 Table of Contents • the requirement that any amendment to the Charter will be approved by (i) the holders of 75% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, so long as Mr.
Biggest changeOur Charter and Bylaws provide for, among other things: • the ability of the board of directors (the “Board”) to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • the limitation of the liability of, and the indemnification of, our directors and officers; • any increase or decrease in the number of directors will require the affirmative vote of the directors nominated by Yang Wu as provided in the Stockholders Agreement (as defined below); • the requirement that any Board vacancies occurring by reason of the death, resignation or removal of any director nominated by Yang Wu or the Tuscan Group must be filled by the stockholder who was entitled to nominate such director to the Board; • the requirement that committees of the Board will consist of the number of directors nominated by Yang Wu that is proportionate to the number of directors on the Board nominated by Yang Wu; • the prohibition of stockholder action by written consent for any action that is required or permitted to be taken at an annual or special stockholders meeting; • the ability to call for a special meeting of stockholders will only be available to (i) the Board, (ii) the chairman of the Board and (iii) Yang Wu, so long as Yang Wu beneficially owns at least 10% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; • the limitation that directors on the Board may only be removed for a cause and only upon the affirmative vote of the holders of at least a majority of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, voting together as a single class; • the election that the Company will not be governed by Section 203 of the DGCL, which will prohibit the Company from taking certain actions involving an “interested stockholder” for a certain period of time; • the requirement that any amendment to the Charter will be approved by (i) the holders of 75% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, so long as Yang Wu beneficially owns at least 10% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, or (ii) the holders of a majority of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, if Yang Wu ceases to beneficially own at least 10% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors; and • the ability of the Board to amend the Bylaws, which may allow the Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt.
Our capital requirements will depend on many factors, including, but not limited to: technological advancements; market acceptance of our products and product enhancements, and the overall level of sales of our products; R&D expenses; our relationships with our customers and suppliers; our ability to control costs; sales and marketing expenses; enhancements to our infrastructure and systems and any capital improvements to our facilities; our ability to maintain existing manufacturing equipment; potential acquisitions of businesses and product lines; and general economic conditions, including the effects of international conflicts and their impact on the automotive industry in particular.
Our capital requirements will depend on many factors, including, but not limited to: technological advancements; market acceptance of our products and product enhancements; the overall level of sales of our products; R&D expenses; our relationships with our customers and suppliers; our ability to control costs; sales and marketing expenses; enhancements to our infrastructure and systems and any capital improvements to our facilities; our ability to maintain existing manufacturing equipment; potential acquisitions of businesses and product lines; and general economic conditions, including the effects of international conflicts and their impact on the automotive industry in particular.
The filing of mechanics liens and/or litigation could delay the construction project while the matters are resolved, increase the overall cost of the project due to legal fees and potential settlements, limit our ability to obtain financing for our Clarksville, Tennessee expansion project, and/or have a material adverse impact on our business, financial condition and operating results.
The filing of mechanics liens and/or litigation could delay the financing or construction project while the matters are resolved, increase the overall cost of the project due to legal fees and potential settlements, limit our ability to obtain financing for our Clarksville, Tennessee expansion project, and/or have a material adverse impact on our business, financial condition and operating results.
These risks include: • localization of the marketing and deployment of our products; • lack of familiarity with, and burdens of, complying with foreign laws, legal and commercial standards, regulatory requirements, export requirements, tariffs and other barriers, including laws related to employment or labor; • conforming our products to various international regulatory and safety requirements where our products are sold, or homologation; • difficulty in establishing, staffing and managing foreign operations; • difficulties attracting customers in new jurisdictions; • difficulty in engaging and retaining distributors that are knowledgeable about, and can function effectively, in overseas markets; • management, communication and integration problems resulting from cultural or language differences and geographic dispersion; • different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues; • increased costs associated with maintaining marketing efforts in various countries; • new and different sources of competition; • increased financial accounting and reporting burdens and complexities; • diversion of our management’s attention and resources to explore, negotiate, or close acquisitions and to integrate, staff and manage geographically remote operations and employees; • sufficiency of qualified labor pools in various international markets; 29 Table of Contents • foreign government taxes, currency controls, regulations and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in the U.S., and foreign tax and other laws limiting our ability to repatriate funds to the U.S.; • changes in global currency systems or fluctuations in exchange rates that may increase the volatility of or adversely affect our foreign-based revenue; • our ability to enforce our contractual rights; • compliance with anti-corruption laws, economic sanction laws and regulations, anti-tax laws, export controls and other laws and regulations regarding international business operations; • foreign government trade restrictions, customs regulations, tariffs and price or exchange controls; • preferences of foreign nations for domestically produced products; • uncertain political and economic climates; and • inability to obtain, maintain or enforce intellectual property rights in some countries.
These risks include: • localization of the marketing and deployment of our products; • lack of familiarity with, and burdens of, complying with foreign laws, legal and commercial standards, regulatory requirements, export requirements, tariffs and other barriers, including laws related to employment or labor; • conforming our products to various international regulatory and safety requirements where our products are sold, or homologation; • difficulty in establishing, staffing and managing foreign operations; • difficulties attracting customers in new jurisdictions; • difficulty in engaging and retaining distributors that are knowledgeable about, and can function effectively, in overseas markets; • management, communication and integration problems resulting from cultural or language differences and geographic dispersion; • different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues; • increased costs associated with maintaining marketing efforts in various countries; • new and different sources of competition; • increased financial accounting and reporting burdens and complexities; • diversion of our management’s attention and resources to explore, negotiate, or close acquisitions and to integrate, staff and manage geographically remote operations and employees; • sufficiency of qualified labor pools in various international markets; • foreign government taxes, currency controls, regulations and permit requirements, including foreign taxes that we may not be able to offset against taxes imposed upon us in the U.S., and foreign tax and other laws limiting our ability to repatriate funds to the U.S.; • changes in global currency systems or fluctuations in exchange rates that may increase the volatility of or adversely affect our foreign-based revenue; • our ability to enforce our contractual rights; • compliance with anti-corruption laws, economic sanction laws and regulations, anti-tax laws, export controls and other laws and regulations regarding international business operations; • foreign government trade restrictions, customs regulations, tariffs and price or exchange controls; • preferences of foreign nations for domestically produced products; • uncertain political and economic climates; and • inability to obtain, maintain or enforce intellectual property rights in some countries.
Other factors may influence the adoption of electric vehicles, including, but not limited to: • perceptions about electric vehicle quality, design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles; • perceptions about electric vehicle quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles; • volatility in sales of electric vehicles; • perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technology, including vehicle electronics and regenerative braking systems; • negative perceptions of electric vehicles, such as that they are more expensive than non-electric vehicles and are only affordable with government subsidies or that they have failed to meet customer expectations; • the limited range over which electric vehicles may be driven on a single battery charge and the effects of weather on this range; • the decline of an electric vehicle’s range resulting from deterioration over time in the battery’s ability to hold a charge; • concerns about electric charging infrastructure availability and reliability, which could derail past and present efforts to promote electric vehicles as a practical solution to vehicles which require gasoline; • concerns about charging station standardizations, convenience and cost influencing consumers’ perceptions regarding the convenience of electric vehicle charging stations; • concerns of potential customers about the susceptibility of battery packs to damage from improper charging, as well as the lifespan of battery packs and the cost of their replacement; • concerns regarding comprehensive insurance coverage related to electric vehicles; • developments in alternative technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, which could adversely affect sales of electric vehicles; • the environmental consciousness of consumers; • the availability and volatility in the cost of natural gas, diesel, coal, oil, gasoline and other fuels relative to electricity; • the availability of tax and other government incentives to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles; • concerns regarding the value and costs for upkeep of electric vehicles in the used car market; • the availability of enough skilled labor in after-sale services; and • macroeconomic factors.
Other factors may influence the adoption of electric vehicles, including, but not limited to: • perceptions about electric vehicle quality, design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles; • perceptions about electric vehicle quality, safety (in particular with respect to lithium-ion battery packs), design, performance and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles; • volatility in sales of electric vehicles; • perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technology, including vehicle electronics and regenerative braking systems; • negative perceptions of electric vehicles, such as that they are more expensive than non-electric vehicles and are only affordable with government subsidies or that they have failed to meet customer expectations; • the limited range over which electric vehicles may be driven on a single battery charge and the effects of weather on this range; • the decline of an electric vehicle’s range resulting from deterioration over time in the battery’s ability to hold a charge; • concerns about electric charging infrastructure availability and reliability, which could derail past and present efforts to promote electric vehicles as a practical solution to vehicles which require gasoline; • concerns about charging station standardizations, convenience and cost influencing consumers’ perceptions regarding the convenience of electric vehicle charging stations; • concerns of potential customers about the susceptibility of battery packs to damage from improper charging, as well as the lifespan of battery packs and the cost of their replacement; • concerns regarding comprehensive insurance coverage related to electric vehicles; • developments in alternative technologies, such as advanced diesel, ethanol, fuel cells or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, which could adversely affect sales of electric vehicles; • the environmental consciousness of consumers; • the availability and volatility in the cost of natural gas, diesel, coal, oil, gasoline and other fuels relative to electricity; • the availability of tax and other government incentives to purchase and operate electric vehicles or future regulation requiring increased use of nonpolluting vehicles; • concerns regarding the value and costs for upkeep of electric vehicles in the used car market; • the availability of enough skilled labor in after-sale services; and 18 Table of Contents • macroeconomic factors.
Accordingly, government actions in the future, including any decision not to continue to support economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof and could require us to divest ourselves of any interest we then hold in PRC properties or entities, including our PRC operating subsidiary, Microvast Power Systems, Ltd.
Accordingly, government actions in the future, including any decision not to continue to support economic reforms and to return to a more centrally planned economy or regional or local variations in the implementation of economic policies, could have a significant effect on economic conditions in China or particular regions thereof and could require us to divest ourselves of any interest we then hold in PRC properties or entities, including our PRC operating subsidiary, Microvast Power Systems, Ltd ("MPS").
Our sales in Russia represented 0% and less than 1% of our total revenue in 2023 and 2022, respectively, and due to the ongoing military conflict in Ukraine we will not be active in the Russian market until there has been a peaceful resolution.
Our sales in Russia represented 0%, 0% and less than 1% of our total revenue in 2024, 2023 and 2022, respectively, and due to the ongoing military conflict in Ukraine we will not be active in the Russian market until there has been a peaceful resolution.
Therefore, if any government imposes more stringent regulations in the future, we will have to incur additional substantial costs and expenses in order to comply with new regulations, which may negatively affect our results of operations.
If any government imposes more stringent regulations in the future, we will have to incur additional substantial costs and expenses in order to comply with new regulations, which may negatively affect our results of operations.
Our planned expansion into new applications and new markets as we continue to expand our global presence pose additional risks which could adversely affect our business, financial condition and results of operations. To date, we have focused our business on the sale of our LpTO, LpCO, MpCO, HpCO, and HnCO battery systems, primarily for use in commercial electric vehicles.
Our planned expansion into new applications and new markets as we continue to expand our global presence poses additional risks which could adversely affect our business, financial condition and results of operations. To date, we have focused our business on the sale of our LpTO, LpCO, MpCO, HpCO, and HnCO battery systems, primarily for use in commercial electric vehicles.
We may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in revenues, which would further increase our losses. Our business and our ability to complete the Clarksville Phase 1A expansion could be adversely affected by mechanics liens filed by contractors that we do not have sufficient funds to pay.
We may find that these efforts are more expensive than we currently anticipate or that these efforts may not result in revenues, which would further increase our losses. Our business and our ability to complete the Clarksville expansion could be adversely affected by mechanics liens filed by contractors that we do not have sufficient funds to pay.
As a result, the Tuscan Group is likely to make a substantial profit on its investment in us even if the trading price of our common stock declines, while our public shareholders could lose significant value in their common stock and experience a negative rate of return on the shares they purchased in the IPO or in the public market.
As a result, the Tuscan Group is likely to make a substantial profit on its investment in us even if the trading price of our common stock declines, while our public stockholders could lose significant value in their common stock and experience a negative rate of return on the shares they purchased in the IPO or in the public market.
If our products manufactured from imported pa rts or components fail to meet the regulatory thresholds to qualify as “domestic origin” under the applicable regulations, we might be disqualified or otherwise 23 Table of Contents precluded from supplying those products to customers that are subject to applicable “Buy America” requirements, or we might be liable to those customers for having failed to comply with certifications or representations that our products are “domestic origin,” each of which would likely adversely affect our business, prospects, financial condition and operating results.
If our products manufactured from imported pa rts or components fail to meet the regulatory thresholds to qualify as “domestic origin” under the applicable regulations, we might be disqualified or otherwise precluded from supplying those products to customers that are subject to applicable “Buy America” requirements, or we might be liable to those customers for having failed to comply with certifications or representations that our products are “domestic origin,” each of which would likely adversely affect our business, prospects, financial condition and operating results.
If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 10-K for the relevant fiscal year.
If the PCAOB determines in the future that it no longer has full access to 42 Table of Contents inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 10-K for the relevant fiscal year.
Our Charter and Bylaws contain provisions that could have the effect of rendering more difficult, discouraging, delaying or preventing a takeover attempt that may be beneficial to our stockholders but that is deemed undesirable by Mr. Wu and therefore depresses the trading price of our common stock.
Our Charter and Bylaws contain provisions that could have the effect of rendering more difficult, discouraging, delaying or preventing a takeover attempt that may be beneficial to our stockholders but that is deemed undesirable by Yang Wu and therefore depresses the trading price of our common stock.
Should sufficient funding not be secured through the plans, or should there be a delay in the timing of securing funds through these funding initiatives, this would have adverse implications for our Company and its shareholders and could have a material adverse effect on our business and results of operations.
Should sufficient funding not be secured through the plans, or should there be a delay in the timing of securing funds through these funding initiatives, this would have adverse implications for our Company and its stockholders and could have a material adverse effect on our business and results of operations.
The forum provision further provides that the federal district courts of the United States of America will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for the resolution of any action asserting claims arising under the Securities Act of 1933 (the "Securities Act").
The forum provision further provides that the federal district courts of the United States of America will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for the resolution of any action asserting claims arising under the Securities Act of 1933, as amended (the "Securities Act").
Further progress on the Clarksville Phase 1A expansion is dependent on securing additional financing, and even once the facility is established, not all of the raw materials we require to manufacture our products are currently available from U.S. suppliers.
Further progress on the Clarksville expansion is dependent on securing additional financing, and even once the facility is established, not all of the raw materials we require to manufacture our products are currently available from U.S. suppliers.
As a manufacturer, we are subject to various environmental laws and regulations on air emission, wastewater discharge, solid waste, noise and the disposal of hazardous materials. Cobalt and lithium are toxic materials that are important raw materials in our batteries.
As a manufacturer, we are subject to various environmental laws and regulations on air emission, wastewater discharge, solid waste, noise and the use, generation, and disposal of hazardous materials. Cobalt and lithium are toxic materials that are important raw materials in our batteries.
If we fail to comply with any of the present or future environmental regulations in any material aspect or cause any loss to any third parties due to our pollutant emission practices, improper handling of hazardous waste or other environmental noncompliance, we may suffer from negative publicity and may be required to pay substantial fines, pay damages to such third parties, or suspend or even cease 33 Table of Contents operations.
If we fail to comply with any of the present or future environmental regulations in any material aspect or cause any loss to any third parties due to our pollutant emission practices, improper handling of hazardous waste or other environmental noncompliance, we may suffer from negative publicity and may be required to pay substantial fines, pay damages to such third parties, or suspend or even cease operations.
Issued patents may be challenged, narrowed, invalidated or circumvented. Some countries’ legal systems do not strongly enforce patents, limiting our ability to protect our inventions as effectively as in the U.S. and Europe.. For example, the validity, enforceability and scope of protection available under the relevant intellectual property laws in China is uncertain and still evolving.
Issued patents may be challenged, narrowed, invalidated or circumvented. Some countries’ legal systems do not strongly enforce patents, limiting our ability to protect our inventions as effectively as in the U.S. and Europe. For example, the validity, enforceability and scope of protection available under the relevant intellectual property laws in China 45 Table of Contents is uncertain and still evolving.
According to Directive 2013/56/EU, which amended Directive 2006/66/EC and which has been implemented in Germany with the German Battery Act (Batteriegesetz), we are obligated, in several countries, to take back and recycle or otherwise safely dispose of all batteries we directly sell as a producer free of charge for our clients.
According to Directive 2013/56/EU, which amended Directive 2006/66/EC and which has been implemented in Germany with the German Battery Act (Batteriegesetz), we are obligated, in several EU member states, to take back and recycle or otherwise safely dispose of all batteries we directly sell as a producer free of charge for our clients.
Changes in the rates offered by local electric utilities and/or in the applicability or amounts of charges and other fees imposed by such utilities on customers acquiring our energy storage products could adversely affect the demand for our energy storage products.
Changes in the rates offered by local electric utilities and/or in the applicability or amounts of charges and other fees imposed by such utilities on customers acquiring our energy storage products could adversely affect the demand for our energy storage products. The U.S.
If there are quality issues with respect to these third-party components included in our battery systems, we may not discover the issue until after our products have been shipped and installed. In additio n, we may have little or no recourse against these third-party suppliers arising out of warranty claims made by our customers.
If there are quality issues with respect to these third-party components included in our battery systems, we may not discover the issue until after our products have been shipped and installed. In addition, we may have little or no recourse against these third-party suppliers arising out of warranty claims made by our customers.
These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the funding of our China 41 Table of Contents operations or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our shares.
These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the funding of our China operations or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our shares.
Major advancements in alternative technologies like fuel cells, advanced diesel, ethanol, hydrogen, natural gas, or breathing batteries could unexpectedly and negatively impact our business, prospects, financial health, and operational results. Existing and other battery technologies, fuels or sources of energy may emerge as customers’ preferred alternatives 21 Table of Contents to our battery products.
Major advancements in alternative technologies like fuel cells, advanced diesel, ethanol, hydrogen, natural gas, or breathing batteries could unexpectedly and negatively impact our business, prospects, financial health, and operational results. Existing and other battery technologies, fuels or sources of energy may emerge as customers’ preferred alternatives to our battery products.
These provisions could also make it difficult for our stockholders to take certain actions, including electing directors who are not nominated by Mr. Wu or the Tuscan Group or amending the Charter.
These provisions could also make it difficult for our stockholders to take certain actions, including electing directors who are not nominated by Yang Wu or the Tuscan Group or amending the Charter.
Any such injuries, damages or investigations could lead to liability to us, cause delays in the manufacturing of our product and/or adversely affect market acceptance which could adversely affect our operations and financial condition. 19 Table of Contents Our manufacturing process incorporates pulverized solids, which can be toxic to employees when allowed to become airborne in high concentrations.
Any such injuries, damages or investigations could lead to liability to us, cause delays in the manufacturing of our product and/or adversely affect market acceptance which could adversely affect our operations and financial condition. Our manufacturing process incorporates pulverized solids, which can be toxic to employees when allowed to become airborne in high concentrations.
Furthermore, failure to obtain a sufficient supply of these raw materials and components or produce them in-house at a reasonable cost could also harm our revenue and gross profit margins. If rising prices or availability of raw materials continues to persist, our business and results of operations may be adversely affected.
Furthermore, failure to obtain a sufficient supply of these raw materials and components or produce them in-house at a reasonable cost could also harm our revenue and gross profit margins. 25 Table of Contents If rising prices or availability of raw materials continues to persist, our business and results of operations may be adversely affected.
In addition, expansion imposes significant added responsibilities on our senior management and our resources, including financial resources and the need to identify, recruit, maintain and integrate additional employees. Our expansion will also expose us to greater overhead and 18 Table of Contents support costs and other risks associated with the manufacture and commercialization of new products.
In addition, expansion imposes significant added responsibilities on our senior management and our resources, including financial resources and the need to identify, recruit, maintain and integrate additional employees. Our expansion will also expose us to greater overhead and support costs and other risks associated with the manufacture and commercialization of new products.
Our R&D efforts are concentrated on discovering new lithium chemistries and formulations to improve product quality and features while lowering costs. Some of our competitors are conducting R&D on alternative battery technologies, such as fuel cells and supercapacitors, and academic studies are ongoing as to the viability of sulfur and aluminum-based battery technologies.
Our R&D efforts are concentrated on discovering new lithium chemistries and formulations to improve product quality and features while lowering costs. Some of our competitors are conducting R&D on alternative battery technologies, such as fuel cells and super capacitors, and academic studies are ongoing as to the viability of sulfur and aluminum-based battery technologies.
One of our manufacturing sites is in China, and under PRC environmental regulations we are required to maintain the pollutant emission levels at each of our facilities within the levels prescribed by the relevant governmental authorities and obtain a pollution discharge permit for our water and air emissions.
One of our manufacturing sites is in China, and under PRC environmental regulations we are required to maintain the pollutant emission levels at each of our facilities within the levels prescribed by the relevant governmental authorities and obtain a pollution discharge permit 33 Table of Contents for our water and air emissions.
We believe that our financial statements reflect adequate reserves to cover such a contingency, but ther e can be no assurances in that regard. In addition, under several of the tax regimes under which we operate, related party transactions must be conducted on an arm’s-length basis.
We believe that our financial statements reflect adequate reserves to cover such a contingency, but there can be no assurances in that regard. In addition, under several of the tax regimes under which we operate, related party transactions must be conducted on an arm’s-length basis.
If the markets for electric vehicles in China, Europe or the U.S. do not develop as we expect or develop more slowly than we expect, our business, prospects, financial condition and operating results will be harmed, because demand for our products and services will not increase as expected or may even be reduced.
If the markets for EVs in China, Europe or the U.S. do not develop as we expect or develop more slowly than we expect, our business, prospects, financial condition and operating results will be harmed, because demand for our products and services will not increase as expected or may even be reduced.
If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitab ility of our operations.
If such a disagreement were to occur, and our position was not sustained, we could be required to pay additional taxes, interest and penalties, which could result in one-time tax charges, higher effective tax rates, reduced cash flows and lower overall profitability of our operations.
This means we will forgo any sales opportunities in the Russian market which could result in a material adverse effect on our business, cash flow, results of operations and financial condition. In addition, we rely on our payment processors to understand the destination of our payments to sellers.
This means we will forgo any sales opportunities in the Russian market which could result in a material adverse effect on our business, cash flow, results of operations and financial condition. 36 Table of Contents In addition, we rely on our payment processors to understand the destination of our payments to sellers.
In 2021, the PRC government also implemented a comprehensive data security law which aims to regulate a wide range of issues in relation to the collection, storage, processing, use, provision, transaction and publication of any kind of data, and a law on personal information which provides a comprehensive set of rules on personal information protection in China.
In 2021, the PRC government also implemented a comprehensive data security law which aims to regulate a wide range of issues in relation to the collection, 39 Table of Contents storage, processing, use, provision, transaction and publication of any kind of data, and a law on personal information which provides a comprehensive set of rules on personal information protection in China.
The theft or unauthorized use or publication of our trade secrets and other confidential business information could reduce the differentiation of our products and harm our business, the value of our investment in development or business acquisitions could be reduced and third parties might make claims against us related to losses of their confidential or proprietary information.
The theft or unauthorized use or publication of our trade secrets and other confidential business information 44 Table of Contents could reduce the differentiation of our products and harm our business, the value of our investment in development or business acquisitions could be reduced and third parties might make claims against us related to losses of their confidential or proprietary information.
However, the markets we have targeted, primarily those in China, Europe and the U.S. may not achieve the level of growth we ex pect. If any market fails to achieve our expected level of growth, we may have excess manufacturing capacity and may not be able to generate enough revenue to achieve or sustain our profitability.
However, the markets we have targeted, primarily those in China, Europe and the U.S. may not achieve the level of growth we expect. If any market fails to achieve our expected level of growth, we may have excess manufacturing capacity and may not be able to generate enough revenue to achieve or sustain our profitability.
According to the PRC corporate law, our Chinese subsidiaries are required to set aside at least 10% of our after-tax profit based on the PRC accounting standards and regulations each year to our statutory surplus reserve, until the balance in the reserve reaches 50% of the registered capital of each of our 40 Table of Contents Chinese subsidiaries.
According to the PRC corporate law, our Chinese subsidiaries are required to set aside at least 10% of our after-tax profit based on the PRC accounting standards and regulations each year to our statutory surplus reserve, until the balance in the reserve reaches 50% of the registered capital of each of our Chinese subsidiaries.
Our lengthy and variable sales cycle makes it difficult for us to accurately forecast our revenue and other operating results. As a result, we expect our results of the operation to fluctuate on a quarterly and annual basis, which could cause our stock price to fluctuate or decline.
General Risk Factors • Our lengthy and variable sales cycle makes it difficult for us to accurately forecast our revenue and other operating results. As a result, we expect our results of the operation to fluctuate on a quarterly and annual basis, which could cause our stock price to fluctuate or decline.
However, there can be no assurance that a field failure of our ba ttery systems will not occur, which could damage the vehicle in which it is fitted or lead to personal injury or death and may subject us to lawsuits.
However, there can be no assurance that a field failure of our battery systems will not occur, which could damage the vehicle in which it is fitted or lead to personal injury or death and may subject us to lawsuits.
Our future depends on the needs and success of our customers, as well as the demand for our customers’ products or services. Our battery products’ demand hinges on end-market users. If our customers’ industries underperform, leading to decreased demand for their output, our product demand may similarly decline.
Our future depends on the needs and success of our customers, as well as the demand for our customers’ products or services. 22 Table of Contents Our battery products’ demand hinges on end-market users. If our customers’ industries underperform, leading to decreased demand for their output, our product demand may similarly decline.
Furthermore, policing 43 Table of Contents unauthorized use of proprietary technology is difficult and expensive, and we may need to resort to litigation to enforce or defend patents issued to us or our other intellectual property rights or to determine the enforceability, scope and validity of our proprietary rights or those of others.
Furthermore, policing unauthorized use of proprietary technology is difficult and expensive, and we may need to resort to litigation to enforce or defend patents issued to us or our other intellectual property rights or to determine the enforceability, scope and validity of our proprietary rights or those of others.
Such systems could also be subject to break-ins, sabotage and intentional acts of vandalism, as well as disruptions and security incidents as a result of non-technical issues, including intentional or inadvertent acts or omissions 36 Table of Contents by employees, service providers, or others.
Such systems could also be subject to break-ins, sabotage and intentional acts of vandalism, as well as disruptions and security incidents as a result of non-technical issues, including intentional or inadvertent acts or omissions by employees, service providers, or others.
Technical problems may arise that affect the acceptance of our product by the OEMs. If we are unable to design and develop products that meet the OEMs’ requirements, we may lose 26 Table of Contents opportunities to obtain purchase orders, and our reputation may be damaged.
Technical problems may arise that affect the acceptance of our product by the OEMs. If we are unable to design and develop products that meet the OEMs’ requirements, we may lose opportunities to obtain purchase orders, and our reputation may be damaged.
To the extent the laws become more stringent or otherwise change, our components or the vehicles into which they are incorporated may not comply with applicable international, federal, state or local laws, which would have an 32 Table of Contents adverse effect on our business. Compliance with changing regulations could be burdensome, time consuming, and expensive.
To the extent the laws become more stringent or otherwise change, our components or the vehicles into which they are incorporated may not comply with applicable international, federal, state or local laws, which would have an adverse effect on our business. Compliance with changing regulations could be burdensome, time consuming, and expensive.
The grant funding was expected to support the construction of a new polyaramid separator manufacturing facility in Hopkinsville, Kentucky. On May 23, 2023, the DOE announced that it was declining to award the previously-announced 37 Table of Contents $200 million grant to us.
The grant funding was expected to support the construction of a new polyaramid separator manufacturing facility in Hopkinsville, Kentucky. On May 23, 2023, the DOE announced that it was declining to award the previously-announced $200 million grant to us.
As standards emerge, such as those in China which include specifications for hardware, connecting equipment and service networks and standards for communication and inspection, compatibility of prior fast-charging stations envisioned in our CCT Plan could be made obsolete. We also incorporate materials manufactured by third parties into our products.
As standards emerge, such as those in China which include specifications for hardware, connecting equipment and service networks and standards for communication and inspection, compatibility of prior fast-charging stations envisioned in our Clean City Transit plan could be made obsolete. We also incorporate materials manufactured by third parties into our products.
Further, since the registration of the warrants was not completed within 90 days following the Business Combination, pursuant to the Registration Rights and Lock-Up Agreement, warrant holders may exercise the warrants on a net-share basis.
Further, since the 47 Table of Contents registration of the warrants was not completed within 90 days following the Business Combination, pursuant to the Registration Rights and Lock-Up Agreement, warrant holders may exercise the warrants on a net-share basis.
Our failure to cost-effectively manufacture our batteries in quantities which satisfy our customers’ demand and product specifications and their expectations for product quality and reliable delivery could damage our customer relationships and result in significant lost business opportunities for us. We manufacture our products rather than relying upon third-party outsourcing.
Our failure to cost-effectively manufacture our batteries in quantities which satisfy our customers’ demand and product specifications and their expectations for product quality and reliable delivery could damage our customer relationships and result in significant lost business opportunities for us. 23 Table of Contents We manufacture our products rather than relying upon third-party outsourcing.
We may not be able to obtain additional financing on terms favorable to us, if at all. Moreover, rising interest rates may further increase the costs of 16 Table of Contents obtaining additional capital to meet our requirements.
We may not be able to obtain additional financing on terms favorable to us, if at all. Moreover, rising interest rates may further increase the costs of obtaining additional capital to meet our requirements.
Our cash and cash equivalents balances are concentrated in a few locations around the world, with approximately 11% and 74% of those balances held outside of the U.S. as of December 31, 2022 and 2023 . Cash repatriation costs and restrictions limit our ability to repatriate cash held by our foreign subsidiaries and intercompany dividends.
Our cash and cash equivalents balances are concentrated in a few locations around the world, with approximately 63% and 74% of those balances held outside of the U.S. as of December 31, 2024 and 2023. Cash repatriation costs and restrictions limit our ability to repatriate cash held by our foreign subsidiaries and intercompany dividends.
Our revenue heavily depends on a limited customer base, a trend likely to continue. Due to the nature of our industry and our limited operating history, we have a limited customer base and have depended on a sma ll number of customers for a significant portion of our revenue.
Our revenue heavily depends on a limited customer base, a trend likely to continue. Due to the nature of our industry and our limited operating history, we have a limited customer base and have depended on a small number of customers for a significant portion of our revenue.
Our recent inability to pay contractors at our Clarksville, Tennessee facility has resulted in the filing of mechanics liens against the Clarksville facility project. The effect of mechanics liens are to secure a contractor's right to payment of past due amounts by using our real property as collateral for such amounts.
Our recent inability to timely pay certain contractors at our Clarksville, Tennessee facility has resulted in the filing of mechanics liens against the Clarksville facility project. The effect of mechanics liens is to secure a contractor's right to payment of past due amounts by using our real property as collateral for such amounts.
Failing to anticipate customer preferences and develop appealing products could prevent us from maintaining or growing our revenue and profitability. 22 Table of Contents Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing customer demands in a timely manner.
Failing to anticipate customer preferences and develop appealing products could prevent us from maintaining or growing our revenue and profitability. Our success depends on our ability to identify and originate product trends as well as to anticipate and react to changing customer demands in a timely manner.
We may selectively acquire or invest in other companies or technologies that we believe could complement or expand our platform, enhance our technical capabilities or otherwise offer growth opportunities. However, acquisitions are complex, costly and time-consuming processes and involve numerous risks.
We may selectively acquire or invest in other companies or technologies that we believe could complement or expand our platform, enhance our technical capabilities or otherwise offer growth opportunities. However, acquisitions are 27 Table of Contents complex, costly and time-consuming processes and involve numerous risks.
Changes in laws or regulations could result in higher expenses and pay ments, and uncertainty relating to laws or regulations may also affect how we conduct our operations and structures our investments and could limit our ability to enforce our rights.
Changes in laws or regulations could result in higher expenses and payments, and uncertainty relating to laws or regulations may also affect how we conduct our operations and structures our investments and could limit our ability to enforce our rights.
On February 17, 2023, the CSRC released the Trial Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises (“Circular 43”) and a series of associated regulatory guidelines which will come into effect from March 31, 2023.
On February 17, 2023, the CSRC released the Trial Measures for the Administration of Overseas Issuance and Listing of Securities by Domestic Enterprises (“Circular 43”) and a series of associated regulatory guidelines which came into effect on March 31, 2023.
International operations could lead to complex and unfavorable tax outcomes. We generally conduct our international operations through wholly-owned subsidiaries, branches and representative offices and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.
We generally conduct our international operations through wholly-owned subsidiaries, branches and representative offices and report our taxable income in various jurisdictions worldwide based upon our business operations in those jurisdictions. Our intercompany relationships are subject to complex transfer pricing regulations administered by taxing authorities in various jurisdictions.
The market 17 Table of Contents for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, numerous competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors.
The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, numerous competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors.
We believe we are in compliance with all current PRC and international regulations for the shipment of our products and will seek to comply with any new regulations that are imposed. We believe we have obtained certificates for safe transport of goods for shipping our lithium battery products by air and water.
We believe we are in material compliance with all current PRC and international regulations for the shipment of our products and will seek to comply with any new regulations that are imposed. We also believe we have obtained all required certificates for the safe transport of our lithium battery products by air and water.
Our general liability insurance may not be sufficient to cover potential liability from product liability claims. We currently have general liability insurance with an annual limit of up to approximately $78.7 million to cover liabilities arising from product liability claims or product recalls worldwide (excluding the U.S. and Canada), which may not be sufficient to cover potential liability claims.
We currently have general liability insurance with an annual limit of up to approximately $71.6 million to cover liabilities arising from product liability claims or product recalls worldwide (excluding the U.S. and Canada), which may not be sufficient to cover potential liability claims.
R&D activities, however, are inherently uncertain, and we might encounter practical difficulties in commercializing our research results. Accordingly, our significant investment in our R&D infrastructure may not lead to marketable products.
R&D activities, however, are inherently 21 Table of Contents uncertain, and we might encounter practical difficulties in commercializing our research results. Accordingly, our significant investment in our R&D infrastructure may not lead to marketable products.
We currently purchase certain key raw mat erials for our electrodes and a variety of other components from third parties, some of which we only source from one supplier or from a limited number of suppliers. For the years ended December 31, 2021, 2022 and 2023, we purchased 12%, 18% and 15% of our raw materials from one supplier.
We currently purchase certain key raw mat erials for our electrodes and a variety of other components from third parties, some of which we only source from one supplier or from a limited number of supplier s. For the years ended December 31, 2024, 2023 and 2022, we purchased 19%, 15% and 18% of our raw materials from two suppliers.
This situation will be costly and time consuming and distract our management from growing our business. If such allegations are not proven to be groundless, we and our business operations will be adversely affected.
This situation will be costly and time consuming and 43 Table of Contents distract our management from growing our business. If such allegations are not proven to be groundless, we and our business operations will be adversely affected.
Moreover, if one or more of the analysts who cover us downgrades the common stock, or if our reporting results do not meet their expectations, the market price of the common stock could decline. General Risk Factors We may be exposed to liabilities under the Foreign Corrupt Practices Act (the “FCPA”), U.K.
Moreover, if one or more of the analysts who cover us downgrades the common stock, or if our reporting results do not meet their expectations, the market price of the common stock could decline. General Risk Factors We may be exposed to liabilities under the FCPA, U.K.
A key part of our Clean City Transit plan (the “CCT Plan”) that aims to introduce our battery systems to electric buses, then to taxis and finally to passenger cars is premised on establishing compatible charging station networks in urban areas that accommodate our technologies and products.
A key part of our Clean City Transit 24 Table of Contents plan that aims to introduce our battery systems to electric buses, then to taxis and finally to passenger cars is premised on establishing compatible charging station networks in urban areas that accommodate our technologies and products.
The Tuscan Group paid only a nominal aggregate purchase price of $25,000 for the Founder Shares, or approximately $0.004 per share, while the initial public offering (“IPO”) price of our common stock was $10.00 per share and the trading price of our common stock $0.767 as of March 25, 2024.
The Tuscan Group paid only a nominal aggregate purchase price of $25,000 for the Founder Shares, or approximately $0.004 per share, while the initial public offering (“IPO”) price of our common stock was $10.00 per share and the trading price of our common stock $1.27 as of March 24, 2025.
For instance, for the years ended December 31, 2021, 2022 and 2023, we derived 38.6%, 35.2% and 49.0%, respectively, of our sales from outside of China, including sales in the U.S., France, Germany, India, Singapore, the U.K., among others.
For instance, for the years ended December 31, 2024, 2023 and 2022, we derived 66.5%, 49.0% and 35.2%, respectively, of our sales from outside of China, including sales in the U.S., France, Germany, India, Singapore, the U.K., among others.
The trading volatility of our common stock may be due to a number of factors such as those listed in “ —Risks Related to our Business and Industry ” and “—Risks Related to doing Business in China” and the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products; • future announcements concerning our business, our product users’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the JOBS Act; • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • the issuance of short reports; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; • the impact of possible pandemics on our financial condition and the results of operations; • the conflict between Russia and Ukraine and the conflict in the Middle East between Israel and Hamas 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; and • changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events. 48 Table of Contents These broad market and industry factors may materially reduce the market price of common stock, regardless of our operating performance.
This volatility of our common stock may be due to a number of factors such as those listed in “ —Risks Related to our Business and Industry ” and “—Risks Related to doing Business in China” and the following: • our operating and financial performance and prospects; • our quarterly or annual earnings or those of other companies in our industry compared to market expectations; • conditions that impact demand for our products; • future announcements concerning our business, our product users’ businesses or our competitors’ businesses; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • the size of our public float; • coverage by or changes in financial estimates by securities analysts or failure to meet their expectations; • the issuance of short reports; • market and industry perception of our success, or lack thereof, in pursuing our growth strategy; • strategic actions by us or our competitors, such as acquisitions or restructurings; • changes in laws or regulations which adversely affect our industry or us; • changes in accounting standards, policies, guidance, interpretations or principles; • changes in senior management or key personnel; • issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock; • changes in our dividend policy; • adverse resolution of new or pending litigation against us; • the impact of possible pandemics on our financial condition and the results of operations; • the ongoing conflicts between Russia and Ukraine and in the Middle East, and any restrictive actions that have been or may be taken by the U.S. and/or other countries in response thereto, such as economic, financial or trade sanctions or export controls; and • changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.
The uncertain nature, magnitude, and duration of hostilities stemming from Russia’s invasion of Ukraine, and the war between Israel and Hamas in the Middle East including the potential effects of sanctions limitations, possibility of counter-sanctions, retaliatory cyber-attacks on the world economy and markets, further disruptions to global supply chains and potential shipping delays, have contributed to increased market volatility and uncertainty, which could have an a dverse impact on macroeconomic factors that affect our business.
The uncertain nature, magnitude, and duration of hostilities stemming from the conflicts between Russia and Ukraine and in the Middle East, including the potential effects of sanctions limitations, possibility of counter-sanctions, retaliatory cyber-attacks on the world economy and markets, further disruptions to global supply chains and potential shipping delays, have contributed to increased market volatility and uncertainty, which could have an adverse impact on macroeconomic factors that affect our business.
In order to address the financial and other risks associated with battery exchanges, we have decided to either exchange batteries ourselves or to sell them to partners such as Umicore following the end of their battery life with a customer or their end-user.
In order to address the financial and other risks associated with battery exchanges, we have decided to either exchange batteries ourselves or to sell them to third parties following the end of their battery life with a customer or their end-user.
As a result of the highly specialized, technical nature of our business, we must attract, train and retain a sizable workforce comprising highly-skilled employees and other key personnel.
The success of our business depends on our ability to attract, train and retain highly-skilled employees and key personnel. As a result of the highly specialized, technical nature of our business, we must attract, train and retain a sizable workforce comprising highly-skilled employees and other key personnel.
Even though the warrants have become exercisable, there is no guarantee that the warrants will be in the money prior to their expiration, and they may expire worthless. The exercise price for our warrants is $11.50 per share of common stock, and the trading price of our common stock was $0.767 as of March 25, 2024.
Even though the warrants have become exercisable, there is no guarantee that the warrants will be in the money prior to their expiration, and they may expire worthless. The exercise price for our warrants is $11.50 per share of common stock, and the trading price of our common stock was $1.27 as of March 24, 2025.
Legal restrictions on our Chinese subsidiaries’ ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business.
Restrictions under PRC law on our China subsidiaries’ ability to make dividends and other distributions could materially and adversely affect our ability to grow, make investments or acquisitions that could benefit our business, pay dividends to you, and otherwise fund and conduct our business.
Our executive officers have limited experience in the management of a publicly-traded company. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could significantly increase the amount of time they devote to these activities, which would result in less time being devoted to our strategy and growth.
Their limited experience in dealing with the increasingly complex laws pertaining to public companies could significantly increase the amount of time they devote to these activities, which would result in less time being devoted to our strategy and growth.
Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, which could have a material adverse effect on our operating results or cash flows in the period or periods for which a determination is made.
Although we believe our tax estimates are reasonable, the final determination of any tax audits or litigation could be materially different from our historical tax provisions and accruals, which could have a material adverse effect on our operating results or cash flows in the period or periods for which a determination is made. 35 Table of Contents International operations could lead to complex and unfavorable tax outcomes.
The reduction, elimination or expiration of such incentives could harm our business and cash flows. In August 2022, the United States passed the IRA, which includes a number of government incentives that support the adoption of energy storage products and services and could potentially benefit the Company and its operations. However, forthcoming guidance to implement the IRA from the U.S.
The reduction, elimination or expiration of such incentives could harm our business and cash flows. In August 2022, the United States passed the IRA, which includes a number of government incentives that support the adoption of energy storage products and services and could potentially benefit the Company and its operations. On January 16, 2025, the U.S.
In the years ended December 31, 2021, 2022 and 2023, we sold our electric battery products to 332, 364 and 343 customers, respectively. Our top five customers accounted for approximately 37.3%, 36.1% and 48.6% of our revenues in the years ended December 31, 2021, 2022 and 2023, respectively.
In the years ended December 31, 2024, 2023 and 2022, we sold our electric battery products to 297, 343 and 364 customers, respectively. Our top five customers accounted for approximately 60.0%, 48.6% and 36.1% of our revenues in the years ended December 31, 2024, 2023 and 2022, respectively.
We are a holding company, and we conduct all of our operations through our subsidiaries, including our subsidiaries in China. Most of our cash is held by our holding company in the U.S. We have been and intend to continue to use our cash on hand to fund our growth.
We are a holding company, and we conduct all of our operations through our subsidiaries, including our subsidiaries in China. We have been and intend to continue to use our cash on hand to fund our growth.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeKey responsibilities of Microvast management in cybersecurity include: • setting security objectives: establishing clear security objectives that align with the organization’s overall goals and risk tolerance. • resource allocation: ensuring sufficient resources, including budget, personnel, and technology, to effectively manage cybersecurity risks. • policy development: ensuring security policies and procedures align with industry standards and best practices. • risk Management: overseeing the organization’s risk management program including conducting regular risk assessments and implementing controls to mitigate identified risks. • incident response: Providing oversight and ensuring that the organization has an effective incident response plan that has been tested and employees trained on how to effectively respond to cybersecurity incidents promptly and appropriately. 51 Table of Contents • compliance: ensuring that the organization complies with relevant and applicable cybersecurity regulations and standards and stays abreast of emerging threats and best practices.
Biggest changeTheir responsibilities include: • Security Objectives : Establishing security goals that correspond with corporate objectives and risk appetite. • Resource Allocation : Providing adequate resources, including budget and personnel, to address cybersecurity risks effectively. • Policy Development : Developing and maintaining policies that meet industry standards. • Risk Management : Directing risk management initiatives and instituting control measures to mitigate recognized risks. • Incident Response : Overseeing the implementation and regular testing of incident response plans, with employee training to ensure effective response capabilities. • Compliance : Ensuring adherence to applicable regulations, while remaining vigilant about emerging threats.
For more information on additional risks that the company might face regarding cyberattacks and cybersecurity, see “Risk Factors - Risks Related to our Business and Industry - Cyberattacks or risks related to cybersecurity could have a material effect on our business.” Cybersecurity Governance On July 26, 2023, the SEC adopted a final rule requiring registrants to disclose certain information related to the registrants’ policies regarding cybersecurity risk management and strategy in addition to current policies regarding cybersecurity governance.
We remain unaware of any active threats that could significantly affect our business strategy or financial condition. For more information on cybersecurity risks, see “Risk Factors — Risks Related to Our Business and Industry.” Cybersecurity Governance On July 26, 2023, the SEC adopted a rule requiring enhanced disclosure of cybersecurity risk management, strategy, and governance.
ITEM 1C. CYBERSECURITY 50 Table of Contents Cybersecurity Risk Management and Strategy Maintaining our information security systems, communication networks, IT systems and data centers utilized by our business, and any outsourced service providers that may hold any data utilized by our business is crucial to the successful operation of our business.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy The security and integrity of our information systems, communication networks, IT infrastructure, and data centers are critical to the successful operation of our business. As such, we have invested in advanced technologies to identify and manage material cybersecurity risks that could impede our operations.
The Board reviews and evaluates the organization’s effectiveness to manage cybersecurity threats. The SVP of Information Technology, the General Counsel, and the CEO are responsible for reporting and communicating cybersecurity threats that have material impact on the organization to the Board.
Our Board of Directors evaluates our readiness to manage cybersecurity threats, receiving regular updates from the SVP of Information Technology, General Counsel, and CEO regarding any materially impactful cybersecurity risks.
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The company has made investments in our technology to identify and manage the material risks of cybersecurity threats that could hinder our operations. As part of our regular cybersecurity risk management systems, we routinely reach out to external cybersecurity experts and third-party consultants to provide advice and implement changes in our current policies.
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We also engage reputable outsourced service providers to perform key operational functions, ensuring comprehensive protection of shared data and adherence to rigorous cybersecurity protocols. Microvast utilizes a set of policies, procedures, and technologies designed to prevent, detect, respond to, and recover from cybersecurity threats and incidents.
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The company also relies on the utilization of outsourced service providers who help provide certain functions that are key to the operations of our business.
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These policies, based on the NIST Cybersecurity Framework, are regularly reviewed and updated to integrate industry best practices. Internal control evaluations are conducted routinely to ensure compliance and address any identified vulnerabilities. Our company did not experience any cybersecurity incidents that materially impacted our operations for the year ended December 31, 2024.
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The company has taken steps to ensure the security of any data we might provide to these service providers and to ensure that our operations would be mitigated in terms of risk by engaging reputable service providers who maintain cybersecurity protection programs and protocols for their customers.
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Microvast's SVP of Information Technology, is responsible for risk assessment and management. 52 Table of Contents This individual has experience in developing security policies, enforcing compliance, orchestrating incident responses, and implementing cybersecurity strategies. Management is actively involved in cybersecurity governance, ensuring alignment with our overall business strategy.
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Microvast has established a combination of policies and procedures, and technologies have been designed and implemented, to prevent, detect, respond to, and recover from cybersecurity threats and incidents. Information security policies are regularly reviewed and updated. The policies were created using NIST-CSF framework to ensure that best practices for information security are being adhered to.
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Specific Cybersecurity Measures Microvast has implemented various cybersecurity measures, including, but not limited to the following: • Establishing physical security protocols and securing network access via VPN. • Requiring multi-factor authentication for email and collaboration platforms. • Deploying endpoint detection and response (EDR) and antivirus solutions across all devices. • Enforcing strong password policies with a secured password vault for system credentials. • Minimizing attack vectors by eliminating external web-facing business-critical applications. • Utilizing encryption technologies to safeguard intellectual property and mitigate data loss risks. • Developing a comprehensive suite of information security policies and a strategic information security roadmap. • Implementing a Security Information and Event Management (SIEM) system.
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Internal control tests are regularly performed to test the compliance of the policy processes and procedures and to remediate any identified gaps.
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These efforts, coupled with the isolation of industrial networks and structured software installation processes, demonstrate our continued commitment to maintaining robust cybersecurity defenses. 53 Table of Contents
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Effect of Cybersecurity Threats The company did not experienced a cybersecurity incident that materially impacted our operations during the year ended December 31, 2023, and the company is not aware of any active risks from cybersecurity incidents or risks that are reasonably likely to have a material impact on the operations of our business, including its business strategy, or financial condition.
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Microvast’s SVP of Information Technology and the Information Security Manager are responsible for assessing as well as managing and determining the risks that could potentially have material impact on Microvast operations and business activity. The SVP of Information Technology and the Information Security Manager have both worked in the Cybersecurity realm for many years.
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Both have led information security teams and have deep knowledge of the requirements for implementing and managing a cybersecurity program. Their expertise and experience include establishing policies and procedures, compliance enforcement, and the ability to identify potential security risks and develop strategies for mitigating those risks, incident response planning and threat mitigation.
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The management team plays a crucial role in the cybersecurity process by setting the tone for the organization’s approach to cybersecurity and ensuring that it is integrated into the overall business strategy.
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The Board regularly reviews the organization’s risk posture and provides guidance to minimize or mitigate risk. 52 Table of Contents

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeResearch and development Leased Clarksville, Tennessee United States 577,000 sq. ft. on 82 acres Manufacturing (cell, module and pack), testing, warehouse, sales, administrative offices Owned Windsor, Colorado United States 99,536 sq.ft on 5.324 acres Manufacturing (ESS Assembling), testing, warehouse Owned Timnath, Colorado United States 24,993 sq.ft. on 6.76 acres ESS headquarters, administrative offices Owned Berlin Germany 185,000 sq. ft. on 9 acres European headquarters, administrative offices, manufacturing (module and pack), testing, warehouse, sales, after sales-service Leased London United Kingdom 4,990 sq. ft.
Biggest changeCorporate headquarters, administrative offices Leased Lake Mary, Florida United States 75,000 sq. ft. on 7 acres Research and development, administrative offices Owned Clarksville, Tennessee United States 577,000 sq. ft. on 82 acres Manufacturing (cell, module and pack), testing, energy storage container assembly, warehouse, sales, after-sales service, administrative offices Owned Timnath, Colorado United States 24,993 sq.ft. on 6.76 acres administrative offices Owned Berlin Germany 185,000 sq. ft. on 9 acres European headquarters, administrative offices, manufacturing (module and pack), testing, warehouse, sales, after sales-service Leased London United Kingdom 4,990 sq. ft.
ITEM 2. PROPERTIES Facilities Our corporate headquarters is located in Stafford, Texas at 12603 Southwest Freeway, Suite 300, Stafford, Texas 77477. A summary of our physical properties as of December 31, 2023 follows in the table below. Location Country Approximate Size Function Owned / Leased Stafford, Texas United States 4,400 sq. ft.
ITEM 2. PROPERTIES Facilities Our corporate headquarters is located in Stafford, Texas at 12603 Southwest Freeway, Suite 300, Stafford, Texas 77477. A summary of our physical properties as of December 31, 2024 follows in the table below. Location Country Approximate Size Function Owned / Leased Stafford, Texas United States 4,400 sq. ft.
Manufacturing (other), testing, warehouse, sales, after-sales service, research and development, administrative offices, and canteen services Leased 53 Table of Contents
Manufacturing (other), testing, warehouse, sales, after-sales service, research and development, administrative offices, and canteen services Leased 54 Table of Contents
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Corporate headquarters, administrative offices Leased Lake Mary, Florida United States 75,000 sq. ft. on 7 acres Research and development, administrative offices Owned Orlando, Florida United States 1,200 sq. ft.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of the outcome, litigation has the potential to have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 54 Table of Contents PART II
Biggest changeRegardless of the outcome, litigation has the potential to have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 55 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePlan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 60,226,882 (1) $ 6.01 16,729,872 (2) Equity compensation plans not approved by security holders — $ — — Total 60,226,882 16,729,872 (1) Includes (i) 56,675,326 stock options and restricted stock units (“RSUs”) granted under the Microvast, Inc.
Biggest changePlan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 61,348,476 (1) $ 5.80 15,608,278 (2) Equity compensation plans not approved by security holders — $ — — Total 61,348,476 15,608,278 (1) Includes (i) 56,675,326 stock options and restricted stock units (“RSUs”) granted under the Microvast, Inc.
Any such decision will also be subject to compliance with contractual restrictions and covenants in the agreements governing current and future indebtedness. Securities Authorized for Issuance Under Equity Compensation Plans Our equity compensation plans that provide for the annual awarding of stock-based compensation have been approved by our stockholders. For additional detail, see Note 22.
Any such decision will also be subject to compliance with contractual restrictions and covenants in the agreements governing current and future indebtedness. Securities Authorized for Issuance Under Equity Compensation Plans Our equity compensation plans that provide for the annual awarding of stock-based compensation have been approved by our stockholders. For additional detail, see Note 21.
Share-Based Payment, to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report. The following table sets forth, as of December 31, 2023, certain information related to our compensation plans under which shares of our common stock may be issued.
Share-Based Payment, to our audited consolidated financial statements included in Part II, Item 8 of this Annual Report. The following table sets forth, as of December 31, 2024, certain information related to our compensation plans under which shares of our common stock may be issued.
Recent Sales of Unregistered Securities Information regarding all equity securities of the registrant sold by us during the period covered by this Annual Report that was not registered under the Securities Act was included in a Current Report on Form 8-K, and therefore is not required to be furnished herein. Issuer Purchases of Equity Securities None.
Recent Sales of Unregistered Securities Information regarding all equity securities of the registrant sold by us during the period covered by this Annual Report that was not registered under the Securities Act was included in a Current Report on Form 8-K, and therefore is not required to be furnished herein. Issuer Purchases of Equity Securities None. ITEM 6. [RESERVED]
No further awards may be granted under the Stock Incentive Plan. 55 Table of Contents (2) Represents shares available for future issuance under the 2021 Plan.
No further awards may be granted under the Stock Incentive Plan. 56 Table of Contents (2) Represents shares available for future issuance under the 2021 Plan.
Holders of Common Stock As of March 25, 2024, there were approximately 102 registered holders of our common stock according to the records maintained by our transfer agent. Dividend Policy We currently intend to retain all available funds and any future earnings to fund the development and growth of our business.
Holders of Common Stock As of March 24, 2025, there were approximately 93 registered holders of our common stock according to the records maintained by our transfer agent. Dividend Policy We currently intend to retain all available funds and any future earnings to fund the development and growth of our business.
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Performance Graph This performance graph shall not be deemed “filed” with the SEC or subject to Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference in any of our filings under the Securities Act, as amended.
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The following line graph compares the cumulative total stockholder return on our common stock with the cumulative total return of (i) our common stock, (ii) the NASDAQ Composite Index and (iii) the NASDAQ Clean Edge Green Energy Index Fund (QCLN) from March 27, 2019 to December 31, 2023.
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The comparison assumes the investment of $100 in our common stock and in each of the foregoing indices and reinvestment of all dividends. The stock performance shown represents historical performance and is not representative of future stock performance. ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDiscussions of 2021 items and year-to-year comparisons between 2021 and 2022 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K filed on March 16, 2023. 61 Table of Contents Comparison of the Year Ended December 31, 2022 to the Year Ended December 31, 2023 The following table sets forth our historical operating results for the periods indicated: Amounts in thousands December 31, 2022 2023 $ Change % Change Revenues 204,495 306,617 102,122 49.9 % Cost of revenues (195,422) (249,390) (53,968) 27.6 % Gross profit 9,073 57,227 48,154 530.7 % 4.4 % 18.7 % Operating expenses: General and administrative expenses (104,572) (97,291) 7,281 (7.0) % Research and development expenses (43,508) (45,004) (1,496) 3.4 % Selling and marketing expenses (22,611) (23,614) (1,003) 4.4 % Total operating expenses (170,691) (165,909) 4,782 (2.8) % Subsidy income 1,672 1,953 281 16.8 % Operating loss (159,946) (106,729) 53,217 (33.3) % Other income and expenses: Interest income 3,179 3,609 430 13.5 % Interest expense (3,323) (2,628) 695 (20.9) % Other income/ (expense), net 944 (713) (1,657) (175.5) % Change in fair value of warrant liability 979 59 (920) (94.0) % Loss before income tax (158,167) (106,402) 51,765 (32.7) % Income tax expense (33) (10) 23 (69.7) % Net loss (158,200) (106,412) 51,788 (32.7) % Less: Net loss attributable to noncontrolling interest — (76) (76) 100.0 % Net loss attributable to Microvast Holdings, Inc.
Biggest changeComparison of the Year Ended December 31, 2024 to the Year Ended December 31, 2023 The following table sets forth our historical operating results for the periods indicated: Amounts in thousands December 31, 2024 2023 $ Change % Change Revenues 379,801 306,617 73,184 23.9 % Cost of revenues (260,249) (249,390) (10,859) 4.4 % Gross profit 119,552 57,227 62,325 108.9 % 31.5 % 18.7 % Operating expenses: General and administrative expenses (81,486) (96,787) 15,301 (15.8) % Research and development expenses (41,065) (45,004) 3,939 (8.8) % Selling and marketing expenses (22,576) (23,614) 1,038 (4.4) % Impairment loss of long-lived assets (93,173) (504) (92,669) 18386.7 % Total operating expenses (238,300) (165,909) (72,391) 43.6 % Subsidy income 2,658 1,953 705 36.1 % Operating loss (116,090) (106,729) (9,361) 8.8 % Other income and expenses: Interest income 742 3,609 (2,867) (79.4) % Interest expense (9,711) (2,628) (7,083) 269.5 % Gain on debt restructuring 9,406 — 9,406 100.0 % Other income/ (expense), net 156 (713) 869 (121.9) % Changes in fair value of warrant liability and convertible loan (79,960) 59 (80,019) (135625.4) % Loss before income tax (195,457) (106,402) (89,055) 83.7 % Income tax expense — (10) 10 (100.0) % Net loss (195,457) (106,412) (89,045) 83.7 % Less: Net loss attributable to noncontrolling interest — (76) 76 (100.0) % Net loss attributable to Microvast Holdings, Inc.
GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.
In accordance with Accounting Standards Update ("ASU") No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40),” management has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the condensed consolidated financial statements are issued and has determined that the Company’s ability to continue as a going concern is dependent on its ability to raise additional capital.
In accordance with Accounting Standards Update ("ASU") No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40),” management has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date of the consolidated financial statements are issued and has determined that our ability to continue as a going concern is dependent on our ability to generate cash from future operations and additional capital.
We believe continuous investment in our technology and operations will deliver long-term targeted revenue and income growth. Through a vertically integrated approach, we have developed proprietary technologies spanning the entire battery system, from basic cell materials (cathode, anode, electrolyte, separator) to cooling systems and software controls.
We believe continuous investment in our technology and operations will deliver long-term targeted revenue and income growth. Through a vertically integrated approach, we have developed proprietary technologies spanning the entire battery system—from the core materials of a battery cell (cathode, anode, electrolyte, separator) to thermal management systems and advanced software controls.
As of December 31, 2023, we were in compliance with all material terms and covenants of our loan agreements, credit agreements and bonds. On July 23, 2021, we received $708.4 million from the completion of the Business Combination, $705.1 million net of transaction costs paid by Microvast, Inc.
See Note 26 for details. As of December 31, 2024, we were in compliance with all material terms and covenants of our loan agreements, credit agreements and bonds. On July 23, 2021, we received $708.4 million from the completion of the Business Combination, $705.1 million net of transaction costs paid by Microvast, Inc.
Capital expenditures and other contractual obligations Our capital expenditures amounted to $150.9 million and $186.8 million for the years ended December 31, 2022 and 2023, respectively. Our capital expenditures in 2022 and 2023 related primarily to the construction of manufacturing facilities under our Clarksville Phase 1A expansion and Huzhou, China.
Capital expenditures and other contractual obligations Our capital expenditures amounted to $49.9 million and $186.8 million for the years ended December 31, 2024 and 2023, respectively. Our capital expenditures in 2024 and 2023 related primarily to the construction of manufacturing facilities under our Clarksville expansion and Huzhou, China.
Our future capital requirements will depend on many factors, including, but not limited to funding planned production capacity expansions and for general working capital. In addition, we may in the future enter into arrangements to acquire or invest in complementary businesses or technologies.
We are seeking to secure financing to complete the Tennessee facility. Our future capital requirements will depend on many factors, including, but not limited to funding planned production capacity expansions and for general working capital. In addition, we may in the future enter into arrangements to acquire or invest in complementary businesses or technologies.
Without access to debt financing we were unable to progress the Clarksville Phase 1A expansion project on its intended timetable, and further progress is still contingent on having full access to funding to complete the remaining project work.
Without access to financing, we are unable to progress the Clarksville expansion project on its intended timetable, and further progress is still contingent on having full access to funding to complete the remaining project work.
For the year ended December 31, 2023, two customers accounted for 18% and 11% of our net revenues. In 2022, one customer accounted for 12% of our net revenues.
For the year ended December 31, 2024, one customer accounted for 39% of our net revenues. In 2023, two customers accounted for 18% and 11% of our net revenues.
The exercise price for our outstanding warrants is $11.50 per share of common stock, and the trading price of our common stock was $0.767 as of March 25, 2024. There is no guarantee that the warrants will be exercised prior to their expiration, however, we do not expect this to impact our liquidity.
The exercise price for our outstanding warrants is $11.50 per share of common stock, and the trading price of our common stock was $1.27 as of March 24, 2025. There is no guarantee that the warrants will be exercised prior to their expiration, however, we do not expect this to impact our liquidity.
We have used $425.6 million of the net proceeds from the Business Combination to expand our manufacturing facilities and for the purchase of property and equipment associated with our existing manufacturing and R&D facilities. In addition, $132.8 million of the net proceeds were used for working capital as of December 31, 2023.
We have used $475.4 million of the net proceeds from the Business Combination to expand our manufacturing facilities and for the purchase of property and equipment associated with our existing manufacturing and R&D facilities. In addition, $185.6 million of the net proceeds were used for working capital as of December 31, 2024.
Cash Flows from Financing Activities During the year ended December 31, 2023, cash generated by financing activities totaled $33.0 million. This cash inflow was a result of $47.8 million proceeds from bank borrowings partially offset by $14.1 million repayment on bank borrowings and $0.7 million partial repayment on outstanding bonds.
During the year ended December 31, 2023, cash generated by financing activities totaled $33.0 million. This was primarily attributable to $47.8 million in proceeds from bank borrowings, partially offset by $14.1 million in repayments on bank borrowings and a $0.7 million partial repayment on outstanding bonds.
Our ability to develop innovative technology has been and will continue to be dependent on our dedicated research team. As part of our efforts to develop innovative technology, in October 2021, we expanded our R&D footprint in Orlando by purchasing a 75,000 square foot facility dedicated to R&D. We plan to continue expanding our R&D presence in the U.S.
As part of our efforts to develop innovative technology, in October 2021, we expanded our R&D footprint in Orlando by purchasing a 75,000 square foot facility dedicated to R&D. We plan to continue expanding our R&D presence in the U.S.
Emerging Growth Company Status Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards.
Loss of Emerging Growth Company Status Under Section 102(b)(1) of the JOBS Act, emerging growth companies are exempt from complying with new or revised financial accounting standards until private companies are required to do so.
Gross profit is equal to revenue less cost of revenues. Gross profit margin is equal to gross profit divided by revenue. Operating Expenses Operating expenses consist of selling and marketing, general and administrative and R&D expenses. Selling and marketing expenses.
Gross profit is equal to revenue less cost of revenues. Gross profit margin is equal to gross profit divided by revenue. 61 Table of Contents Operating Expenses Our operating expenses consist of selling and marketing, general and administrative (G&A), and research and development (R&D) expenses. Selling and marketing expenses.
While governmental economic incentives and mandates can drive market demand for the markets in which we operate and, as a result, battery systems and components, governmental economic incentives can always be gradually reduced or eliminated. Any reduction or elimination of governmental economic incentives may result in reduced demand for our products and adversely affect our financial performance.
While governmental economic incentives and mandates can drive market demand for the markets in which we operate and, as a result, battery systems and components, governmental economic incentives can always be gradually reduced or eliminated.
However, progress on certain third party construction workstreams as well as taking delivery and possession of further equipment started to be impacted toward the end of the fourth quarter due to the required funding to complete the project not being secured. We expect the 53.5Ah cell to be our dominant revenue driver for this next phase of our growth.
However, progress on certain third party construction workstreams as well as taking delivery and possession of further equipment started to be impacted toward the end of the fourth quarter of 2023 due to the required funding to complete the project not being secured.
Cash Flows The following table provides a summary of our cash flow data for the years indicated: Year Ended December 31, 2022 2023 Amount in thousands Net cash used in operating activities (53,928) (75,303) Net cash used in investing activities (175,945) (165,605) Net cash provided by financing activities 4,967 33,041 Cash Flows from Operating Activities During the year ended December 31, 2023, our operating activities used $75.3 million in cash.
Cash Flows The following table provides a summary of our cash flow data for the years indicated: Year Ended December 31, 2024 2023 Amount in thousands Net cash generated from (used in) operating activities 2,814 (75,303) Net cash used in investing activities (12,152) (165,605) Net cash provided by financing activities 37,589 33,041 Cash Flows from Operating Activities During the year ended December 31, 2024, our operating activities generated $2.8 million in cash, compared to a cash outflow of $75.3 million in 2023 .
We make estimates, assumptions and judgments to determine its provision for its income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets. We assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent we believe that recovery is not likely, we established a valuation allowance.
We assess the likelihood that our deferred tax assets will be recovered from future taxable income, and to the extent we believe that recovery is not likely, we established a valuation allowance.
Recent Accounting Pronouncements See Note 2 to the audited consolidated financial statements beginning on page F-12 of this Annual Report for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and its results of operations and cash flows.
Internal Control Over Financial Reporting The information required by this Item regarding internal control over financial reporting is set forth in Part II, Item 9A of this Annual Report. 69 Table of Contents Recent Accounting Pronouncements See Note 2 to the audited consolidated financial statements beginning on page F-14 of this Annual Report for more information about recent accounting pronouncements, the timing of their adoption, and our assessment, to the extent we have made one, of their potential impact on our financial condition and its results of operations and cash flows.
Results of Operations This section of this Form 10-K generally discusses 2022 and 2023 items and year-to-year comparisons between 2022 and 2023.
GAAP and in U.S. dollars. Components of Results of Operations This section of this Form 10-K generally discusses 2023 and 2024 items and year-to-year comparisons between 2023 and 2024.
In the third quarter of 2023, we successfully completed the 2 GWh cell, module and tray capacity expansion for our 53.5Ah cell technology in Huzhou, China.
In the third quarter of 2023, we successfully completed the 2 GWh cell, module and tray capacity expansion for our 53.5Ah cell technology in Huzhou, China. The demand for our 53.5Ah cell technology from our commercial vehicle customer base will be primarily met from this facility.
So far we have used $425.6 million of the proceeds from the Business Combination to expand our manufacturing facilities in order to increase our manufacturing output, enabling us to address our backlog and to capture growing market opportunities.
As of December 31, 2024, we had a backlog of approximately $401.3 million for our battery systems. So far we have used $475.4 million of the proceeds from the Business Combination to expand our manufacturing facilities in order to increase our manufacturing output, enabling us to address our backlog and to capture growing market opportunities.
Deferred tax assets and liabilities reflect the estimated future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax expense or benefit is the result of changes in the deferred tax asset and liability.
Our income tax in the U.K. is calculated at an average tax rate of 19% of the estimated assessable profit of our subsidiary in the U.K. The German enterprise income tax, which is a combination of corporate income tax and trade tax, is calculated at 29.9% of the estimated assessable profit of our subsidiary in Germany.
Our income tax in the U.K. is calculated at an average tax rate of 19% of the estimated assessable profit of our subsidiary in the U.K.
These forecasts of future demand are based upon historical trends and analysis as adjusted for overall market conditions. Inventory write-downs are measured as the difference between the cost of the inventory and its net realizable value, and charged to inventory reserves, which is a component of cost of revenue.
Inventory write-downs are measured as the difference between the cost of the inventory and its net realizable value, and charged to inventory reserves, which is a component of cost of revenue.
At the point of the loss recognition, a new, lower cost basis for those inventories is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis. We recorded inventory impairment losses of $4.8 million and $3.6 million during the years ended December 31, 2022 and 2023, respectively.
At the point of the loss recognition, a new, lower cost basis for those inventories is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
Because of delays in securing additional financing, including our fund-raising process being negatively impacted by the loss of the DOE grant, in the fourth quarter of 2023 we experienced slow progress in continuing construction of our Clarksville Phase 1A expansion, slowing down certain project work streams due to the need for additional financing.
Because of delays in securing additional financing, in the fourth quarter of 2023 we began experiencing slow progress in continuing construction of our Clarksville expansion, slowing down certain construction work streams due to the need for additional financing.
The following table sets forth a breakdown of our revenue by the major geographic regions in which our customers are located for the periods indicated: Year ended December 31, 2022 2023 (In thousands) (In thousands) Revenue % Revenue % China 132,469 65 % 156,480 51 % Other Asia & Pacific countries 52,566 25 % 62,653 21 % Asia & Pacific Region $ 185,035 90 % $ 219,133 72 % Europe 15,809 8 % 84,358 27 % U.S. 3,651 2 % 3,126 1 % Total $ 204,495 100 % $ 306,617 100 % We have historically derived a portion of our revenue in a given reporting period from a limited number of key customers, which have varied from period to period.
The following table provides a breakdown of our revenue by major geographic regions, based on the locations of our customers, for the periods indicated: Year ended December 31, 2024 2023 (In thousands) (In thousands) Revenue % Revenue % China 127,138 33 % 156,480 51 % Other Asia & Pacific countries 50,558 13 % 62,653 21 % Asia & Pacific Region $ 177,696 46 % $ 219,133 72 % Europe 187,718 50 % 84,358 27 % U.S. 14,387 4 % 3,126 1 % Total $ 379,801 100 % $ 306,617 100 % We have historically derived a portion of our revenue in a given reporting period from a limited number of key customers, which have varied from period to period.
Inventory levels are analyzed periodically and written down to their net realizable value if they have become obsolete, have a cost basis in excess of expected net realizable value or are in excess of expected demand. We analyze current and future product demand relative to the remaining product life to identify potential excess inventories.
Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted average method. Inventory levels are analyzed periodically and written down to their net realizable value if they have become obsolete, have a cost basis in excess of expected net realizable value or are in excess of expected demand.
This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. 56 Table of Contents The Business Microvast Holdings, Inc., an advanced battery technology company, is headquartered in Stafford, Texas, and publicly traded on the NASDAQ. We design, develop and manufacture battery components and systems primarily for electric commercial vehicles and utility-scale energy storage systems (“ESS”).
This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. The Business Microvast Holdings, Inc. is an advanced battery technology company, headquartered in Stafford, Texas, and publicly traded on the NASDAQ under the ticker symbol MVST.
Founded in 2006, Microvast was built on a guiding principle that remains core to our mission today: to innovate lithium-ion battery design without relying on past technologies. We call this true innovation.
We specialize in the design, development, and manufacturing of battery components and systems primarily for electric commercial vehicles and utility-scale energy storage systems ("ESS"). Founded in 2006, Microvast was built on a guiding principle that remains central to our mission today: to innovate lithium-ion battery designs without relying on past technologies. We call this true innovation.
Purchase Commitments We regularly enter into non-cancelable contractual obligations primarily related to purchases of inventory. As of December 31, 2023, such purchase commitments, which do not qualify for recognition on our Consolidated Balance Sheets, amount to $52.6 million, most of which is short-term.
As of December 31, 2024, such purchase commitments, which do not qualify for recognition on our consolidated balance sheets, amount to $48.2 million, most of which is short-term.
The proceeds from the Business Combination alone will not be sufficient to complete the Clarksville Phase 1A capacity expansion and meet our general working capital needs and due to foreign restrictions and adverse tax consequences as well as the working capital needs of MPS China, we are unable to repatriate cash from China to pay our accounts payable in the U.S. and fund the continued expansion of our U.S. operations.
The proceeds from the Business Combination alone will not be sufficient to complete the Clarksville expansion and meet our general working capital needs and due to foreign restrictions and adverse tax consequences as well as the working capital needs of Microvast Power Systems Co.
The interest rates of our bank borrowings ranged from 3.40% to 4.60% per annum. As of December 31, 2023, we had convertible bonds of $43.2 million, with interest rates ranging from 3% to 4%. The convertible bonds are due in 2027.
Financings As of December 31, 2024, we had bank borrowings of $111.7 million, the terms of which range from one month to two years. The interest rates of our bank borrowings ranged from 3.25% to 4.85% per annum. As of December 31, 2024, we had convertible bonds of $43.2 million, with interest rates ranging from 3% to 4%.
We are seeking alternate sources of capital. Until financing is in place, this will limit our growth opportunities especially in the U.S. market where our customers desire products that meet their domestic content requirements. Also, we will be forgoing potential IRA credits until such time as the Clarksville Phase 1A expansion is in operation.
Ltd., we are unable to repatriate cash from China to pay our accounts payable in the U.S. and fund the continued expansion of our U.S. operations. We are seeking alternate sources of capital. Until financing is in place, this will limit our growth opportunities, especially in the U.S. market where our customers desire products that meet their domestic content requirements.
This facility employs fully-automated production equipment for the 53.5Ah cell, ensuring significant operating efficiencies. We have also made significant investments in our capacity expansion in Clarksville, Tennessee and by the fourth quarter of 2023 had started to install certain sections of the production line.
To bring this product to market, we have made substantial investments in capacity expansion in Huzhou, China, where we operate fully automated production equipment that delivers significant operational efficiencies. 57 Table of Contents In previous years, we made significant investments in our capacity expansion in Clarksville, Tennessee and by the fourth quarter of 2023 had started to install certain sections of the production line.
(formerly known as Tuscan Holdings Corp.) consummated the previously announced acquisition of Microvast, Inc., a Delaware corporation, pursuant to the Agreement and Plan of Merger dated February 1, 2021, between Tuscan, Microvast and TSCN Merger Sub Inc., a Delaware corporation, pursuant to which Merger Sub merged with and into Microvast, with Microvast surviving the merger. 57 Table of Contents Going Concern In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Going Concern, we evaluate whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern.
(formerly known as Tuscan Holdings Corp.) consummated the previously announced acquisition of Microvast, Inc., a Delaware corporation, pursuant to the Agreement and Plan of Merger dated February 1, 2021, between Tuscan, Microvast and TSCN Merger Sub Inc., a Delaware corporation, pursuant to which TSCN Merger Sub Inc. merged with and into Microvast, with Microvast surviving the merger.
In light of the Company’s projected capital expenditures required to complete and ramp-up its Clarksville Phase 1A expansion and operating requirements under its current business plan, the Company is projecting that its existing cash and assets available for sale and equity securities will not be sufficient to fund its operations through the next twelve months.
In light of operating requirements under our current business plan, we are projecting that the existing cash and assets available for sale and equity securities will not be sufficient to fund our operations through the next twelve months. These conditions and events raise substantial doubt about the our ability to continue as a going concern.
During the year ended December 31, 2022, cash used in investing activities totaled $175.9 million. This cash outflow primarily consisted of $150.9 million of capital expenditures related to the expansion of our manufacturing facilities and to the purchase of property and equipment associated with our existing manufacturing and R&D facilities, and $25.0 million of purchase of short-term investments.
Cash Flows from Investing Activities During the year ended December 31, 2024, cash used in investing activities totaled $12.2 million, a significant reduction compared to previous years. This outflow was primarily driven by $27.7 million in capital expenditures related to the expansion of our manufacturing facilities and the acquisition of property and equipment for existing manufacturing and R&D operations.
Deferred tax expense or benefit is the result of changes in the deferred tax asset and liability. Valuation allowances are established when necessary to reduce deferred tax assets where it is more likely than not that the deferred tax assets will not be realized.
Valuation allowances are established when necessary to reduce deferred tax assets where it is more likely than not that the deferred tax assets will not be realized. We make estimates, assumptions and judgments to determine its provision for its income taxes, deferred tax assets and liabilities, and any valuation allowance recorded against deferred tax assets.
Lease Commitments We lease certain facilities and equipment under non-cancellable lease agreements that expire at various dates through 2036. For additional information, see Note 17 – Leases, in the notes to the unaudited condensed consolidated financial statements in Part II, Item 8 of this Report on Form 10-K.
For additional information, see Note 17 – Leases, in the notes to the audited condensed consolidated financial statements in Part II, Item 8 of this Report on Form 10-K. 66 Table of Contents Purchase Commitments We regularly enter into non-cancelable contractual obligations primarily related to purchases of inventory.
Our most recent innovation is our high-energy nickel manganese cobalt (“NMC”) 53.5 ampere-hour battery cell (the “53.5Ah”), whose performance characteristics make it an ideal solution for commercial vehicle and ESS applications. To bring this product to market we have made significant investments in capacity expansion in Huzhou, China.
Our goal is to become a global leader in ESS, bridging the gap between EVs and renewable energy. One of our recent innovations is our high-energy nickel manganese cobalt ("NMC") 53.5 ampere-hour battery cell (the “53.5Ah”). We believe its advanced performance characteristics make it an optimal solution for both commercial vehicle and ESS applications.
We do not intend to pay any cash dividends on our common stock in the foreseeable future and intend to retain all of the available funds and any future earnings for use in the operation and expansion of our business in China, the E.U. and the U.S.
These funds are not readily available for domestic operations unless repatriated. If we need to transfer any of these funds to the U.S. in the form of a dividend, we would be required to accrue and pay withholding taxes. However, we do not intend to pay cash dividends on our common stock in the foreseeable future.
The increase in Research and Development was primarily due to $5.7 million of increased personnel-related expenses as we increased headcount in our research team as a result of our efforts to further develop and enhance our products, offset by $2.9 million of decreased share-based compensation expenses and $2.1 million of decreased costs of materials used for experiments.
Research and Development Research and development expenses for the year ended December 31, 2024, decreased by $3.9 million (8.8%) compared to 2023. This reduction was primarily driven by a $5.0 million decrease in share-based compensation expenses, partially offset by a $1.8 million increase in personnel-related costs as we expanded our research team to support ongoing product development and innovation initiatives.
We monitor the inventory impairments periodically and, since battery technology continues to advance, we may incur inventory impairment losses in the future. Income Taxes We utilize the asset and liability method in accounting for income taxes.
We recorded inventory impairment losses of $3.3 million and 68 Table of Contents $3.6 million during the years ended December 31, 2024 and 2023, respectively. We monitor the inventory impairments periodically and, since battery technology continues to advance, we may incur inventory impairment losses in the future.
Gain on change in fair value of warrant liability For the year ended December 31, 2023, we recorded a gain of $0.1 million due to the change in fair value of warrant liability compared to a gain of $1.0 million in the same period of 2022, primarily because of the fair value fluctuation of our warrants.
Changes in fair value of warrant liability and convertible loan For the year ended December 31, 2024, we recorded a non-cash loss of $80.0 million, primarily related to the change in the fair value of our convertible loan. This includes a $79.7 million fair value adjustment on the convertible loan issued to a shareholder.
Cost of Revenue and Gross Profit Our cost of revenues for the year ended December 31, 2023 increased 27.6% compared to the year ended December 31, 2022 as a result of our revenue increase, with the rate of increase being lower than the 49.9% increase in our revenues compared to the year ended December 31, 2022.
Cost of Revenue and Gross Profit Our cost of revenues for the year ended December 31, 2024, increased by 4.4% compared to 2023, primarily due to higher sales volumes.
This cash consisted of (1) a net loss of $106.4 million and non-cash charges of $109.6 million, of which $22.1 million is depreciation of property, plant and equipment and $65.0 million is non-cash share-based compensation expense; and (2) a $78.5 million decrease in cash flows from operating assets and liabilities including $47.1 million cash outflow due to the net increase of accounts receivable and notes receivable and $74.4 million increase in inventories, $7.7 million cash out from accrued and other liabilities and prepaid expense and other current assets, $14.4 million cash outflow from other operating assets and liabilities, partially offset by $65.1 million increase in accounts payable and notes payable . 65 Table of Contents During the year ended December 31, 2022, our operating activities used $53.9 million in cash.
A $78.5 million decrease in cash flows from operating assets and liabilities contributed to the cash outflow, primarily due to a $47.1 million increase in accounts receivable and notes receivable, a $74.4 million increase in inventories, and a $7.7 million decrease in accrued liabilities and prepaid expenses, partially offset by a $65.1 million increase in accounts payable and notes payable.
Regulatory Landscape We operate in an industry that is subject to many established environmental regulations, which have generally become more stringent over time, particularly with respect to hazardous waste generation and disposal and pollution control. These regulations affect the cost of our products and our gross margins.
Regulatory Landscape The battery industry is subject to stringent and evolving environmental regulations, particularly concerning hazardous waste management, pollution control, and sustainability requirements. Over time, these regulations have become increasingly strict, impacting both product costs and gross margins.
This cash outflow primarily consisted of $186.8 million of capital expenditures related to the expansion of our manufacturing facilities and to the purchase of property and equipment associated with our existing manufacturing and R&D facilities, and $5.9 million of purchase of short-term investments, offset by $25.5 million of the proceeds from maturity of short-term investments and $1.6 million of the proceeds on disposal of property, plant and equipment.
These were partially offset by $25.5 million in proceeds from the maturity of short-term investments and $1.6 million from the disposal of property, plant, and equipment.
Liquidity and Capital Resources Since inception, we have financed our operations primarily from capital contributions from equity holders, issuance of convertible notes and bank borrowings. As of December 31, 2023, our principal sources of liquidity were our cash and cash equivalents, restricted cash and short-term investments in the amount of $93.8 million.
The fair value changes do not impact our cash position or operating performance but have a material effect on our reported net income. As of December 31, 2024 the outstanding balance was $104.6 million. Liquidity and Capital Resources Since inception, we have financed our operations primarily through capital contributions from equity holders, the issuance of convertible notes, and bank borrowings.
Our mission is to accelerate the adoption of electric vehicles and renewable energy through innovative battery technologies and solutions, driving the transition to a sustainable economy. Specifically, we aim to spearhead U.S. domestic battery production in what is a strategically vital sector and allowing over time for the reliance on supplies from overseas manufacturers to be reduced.
Our mission is to accelerate the global transition to electrification by delivering innovative battery solutions that support the adoption of electric vehicles and renewable energy. A key strategic focus is to be in a position to lead U.S. domestic battery production, reducing reliance on overseas suppliers, and strengthening national energy independence.
Subsidy Income Subsidy income increased from $1.7 million for the year ended December 31, 2022 to $2.0 million in the same period in 2023. The amounts are the one-time awards granted by local governments in 2022 and 2023.
For the year ended December 31, 2024, the Company recognized $93.2 million impairment losses which is mainly from the impairment of long-lived assets in U.S. Subsidy Income Subsidy income increased from $2.0 million for the year ended December 31, 2023 to $2.7 million in the same period in 2024.
Each of these regulations may expand the market size for both electric vehicles and energy storage , which would, in turn, benefit us. We have operations and sales in China, the Asia & Pacific region, Europe and the U.S. and, as a result, changes in trade restrictions and tariffs could impact our ability to meet projected sales or margins.
However, changes in these incentives—such as reductions or eliminations of subsidies—could negatively affect demand for our products. 60 Table of Contents As a global company with operations and sales in China, the Asia-Pacific region, Europe, and the U.S., we are also exposed to trade policies, tariffs, and regulatory shifts that could impact our ability to meet projected sales and maintain profit margins.
This decrease in cash consisted of (1) a net loss of $158.2 million and non-cash charges of $134.7 million, of which $19.8 million is depreciation of property, plant and equipment and $90.8 million is non-cash share-based compensation expense; and (2) a $30.4 million decrease in cash flows from operating assets and liabilities including $35.7 million cash outflow due to the net increase of accounts receivable and notes receivable and $43.7 million increase in inventories, $21.0 million decrease in accrued and other liabilities and prepaid expense and other current assets, partially offset by $20.6 million increase in accounts payable and notes payable and $49.4 million cash inflow from other operating assets and liabilities.
However, operating assets and liabilities resulted in a $52.7 million cash outflow, mainly due to a $0.5 million increase in inventories, a $13.2 million decrease in accrued liabilities and prepaid expenses, and a $54.4 million reduction in accounts payable and notes payable, partially offset by a $15.3 million net decrease in accounts receivable and notes receivable and a $0.1 million increase in other operating assets and liabilities.
Cash Flows from Investing Activities During the year ended December 31, 2023, cash used in investing activities totaled $165.6 million.
During the year ended December 31, 2023, cash used in investing activities totaled $165.6 million, primarily due to $186.8 million in capital expenditures for manufacturing expansion and R&D infrastructure, along with $5.9 million in short-term investment purchases.
Manufacturing Capacity Our growth depends on being able to meet anticipated demand for our products. In order to do this, we will need to increase our manufacturing capacity. As of December 31, 2023, we had a backlog of approximately $276.4 million for our battery systems, equivalent to approximately 1,637.9 MWh.
Any reduction or 59 Table of Contents elimination of governmental economic incentives may result in reduced demand for our products and adversely affect our financial performance. Manufacturing Capacity Our growth depends on being able to meet anticipated demand for our products. In order to do this, we will need to increase our manufacturing capacity.
Over time, we expect our R&D expense to increase in absolute dollars as we continue to make significant investments in developing new products, applications, functionality and other offerings. 60 Table of Contents Subsidy Income Government subsidies represent government grants received from local government authorities.
As we continue to invest in new product development, advanced battery technologies, and enhanced functionality, we expect R&D expenditures to increase in absolute dollar terms. These investments are critical to maintaining technological leadership and delivering next-generation battery solutions to the market. Subsidy Income Government subsidies represent government grants received from local government authorities.
General and Administrative General and administrative expenses for the year ended December 31, 2023 decreased $7.3 million, or 7.0%, compared to the same period in 2022.
General and Administrative General and administrative expenses for the year ended December 31, 2024, decreased by $15.3 million (15.8%) compared to 2023. This decline was primarily driven by a $24.4 million reduction in share-based compensation expenses, partially offset by higher legal and insurance costs.
Selling and marketing expenses consist primarily of personnel-related costs associated with our sales and marketing functions, including salaries and stock-based compensation, and other expenses related to advertising and promotions of our products. We intend to hire additional sales personnel, initiate additional marketing programs and build additional relationships with our customers.
Selling and marketing expenses include personnel-related costs for our sales and marketing teams, including salaries, stock-based compensation, and commission-based incentives. These expenses also cover advertising, promotional activities, and customer engagement efforts to drive product awareness and sales growth. As we continue to expand, we plan to hire additional sales personnel, enhance marketing programs, and strengthen customer relationships.
The JOBS Act provides that a company can choose not to take advantage of the extended transition 67 Table of Contents period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.
The JOBS Act also allows companies to opt out of this extended transition period and follow the same reporting requirements as non-emerging growth companies, an election that is irrevocable once made. As of December 31, 2024, the Company no longer qualifies as an emerging growth company.
Given the uncertainties around our liquidity as described in the Risk Factors and in Management's Discussion and Analysis of Financial Condition and Results of Operations, we have concluded that there is substantial doubt about our ability to continue as a going concern for at least one year from the date of issuance of the consolidated financial statements included elsewhere in this Annual Report.
Based on this recent operating performance, current cash balances, available funding sources, and management’s expectations regarding future operations and capital needs, the Company has concluded that it is probably that their plans will alleviate substantial doubt about its ability to continue as a going concern for at least twelve months from the issuance date of these consolidated financial statements.
The increase in selling and marketing expenses was primarily due to $2.0 million of increased 62 Table of Contents headcount and other increases related to business expansion, offset by $2.8 million of decreased share-based compensation expenses.
Selling and Marketing Selling and marketing expenses for the year ended December 31, 2024, decreased by $1.0 million (4.4%) compared to 2023. This reduction was primarily driven by a $2.1 million decrease in share-based compensation expenses and reductions of the U.S. headcount in Q2 2024, which was partially offset by continued investments in customer engagement and market expansion initiatives.
The consolidated net cash position of $88.2 million as of December 31, 2023 included cash and cash equivalents of $22.3 million, $10.4 million and $0.2 million held by our China, German and UK subsidiaries, respectively, that is not available to fund domestic operations unless funds are repatriated.
As of December 31, 2024, our principal sources of liquidity included cash and cash equivalents and restricted cash totaling $109.6 million. 64 Table of Contents Our consolidated net cash position of $109.6 million as of December 31, 2024, comprised $73.0 million in cash and cash equivalents, with $37.0 million held by our China subsidiary and $9.2 million held by our German and UK subsidiaries.
These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.
To alleviate the conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern, management developed primary plans as described below. • Forecasted cash inflow from operations - For the year ended December 31, 2024, we generated cash flow of $2.8 million from operating activities.
While these areas represent opportunities for us, they also represent challenges and risks that we must successfully address in order to continue the growth of our business and improve our results of operations. Technology and Product Innovation Our financial performance is driven by development and sales of new products with innovative technology.
Technology and Product Innovation Our financial performance is driven by development and sales of new products with innovative technology. Our ability to develop innovative technology has been and will continue to be dependent on our dedicated research team.
In the future, in addition to expanding our production of battery systems and battery components, we expect to increase our focus on producing ESS solutions to support the shift to electrification, with the goal of becoming a leading global ESS solution provider to the energy market.
Our expertise has driven advancements in ultra-fast charging, high energy density, long lifespan, and safety—critical factors for commercial transportation and ESS applications. We are expanding our production of battery systems and components, with an increased emphasis on ESS solutions to support the broader shift to electrification.
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Since our inception, we have primarily focused on developing new battery solutions for the transportation industry which requires batteries that are ultra-fast charging, high energy density, long-lasting and safe.
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Discussion of the earliest of the three years covered by the Consolidated Financial Statements presented in this report has been omitted as that disclosure is included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations within that report.
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This necessity stems from the premise that electric vehicles are truly green only if powered by green energy. Addressing this symbiotic relationship is at the heart of our research activities and we expect it will shape our strategies for the foreseeable future.
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Ultimately, in the second quarter of 2024, we paused construction efforts on the Clarksville development due to insufficient funding. We made a strategic decision to pivot from the originally planned production of NMC production in Clarksville, Tennessee to the 565Ah lithium iron phosphate ("LFP") battery.
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Since 2009, when we launched our first ultra-fast battery system, we have sold and delivered approximately 4,487.5 megawatt hours (“MWh”) of battery systems. Our revenue for the year ended December 31, 2023, increased $102.1 million to $306.6 million, a 50% increase compared to the year ended December 31, 2022.
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We also consolidated our ESS operations previously in Colorado to Clarksville, Tennessee in order to enhance operational efficiencies and speed of deliveries for our U.S. business. In August 2024, we introduced the ME6 ESS, featuring the LFP battery. The shift toward LFP technology for the U.S. ESS market is a strategic decision.
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As of December 31, 2023, our battery systems had an order backlog of about $276.4 million (equivalent to approximately 1,637.9 MWh), with nearly 84% attributable to Europe and the U.S.. We expect to fulfill a majority of our backlog within 2024 and 2025. Completion of the Business Combination On July 23, 2021, Microvast Holdings, Inc.
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The ME6 system offers a cycle life exceeding 10,000 cycles, a lifespan of up to 30 years, compact storage capabilities (6 megawatt hours ("MWh") in a 21-foot container), and enhanced reliability through IP55, C4, and nitrogen protection features. The adoption of LFP batteries provides lower costs, greater safety, and environmental benefits compared to NMC technology, further supporting our sustainability goals.
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This evaluation includes considerations related to our liquidity.
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Although construction progress has been negatively impacted by funding constraints, our goal is that our Clarksville, Tennessee facility will be our major production facility for LFP cells pending financing and facility completion. In January 2025, we announced what we believe is a major breakthrough in solid-state battery technology.
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For more information, see Note 2 to the audited consolidated financial statements of this Annual Report and Risk Factors " There is substantial doubt regarding our our ability to continue as a going concern ", " We may be unable to meet our current capital requirements and will require additional capital to meet our outstanding accounts payable and current liabilities " and " Because substantially all of our revenues are currently derived from outside of the U.S. and the significant costs and restrictions associated with the repatriation of cash from our non-U.S. operations, we may not have sufficient cash flow to cover our liabilities, which may result in a material adverse effect on the Company's business ".
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This innovation represents a paradigm shift, delivering higher energy density for extended range and improved efficiency, enhanced safety by eliminating risks associated with thermal runaway, and faster charging capabilities with an extended cycle life. We plan to make substantial investments in research and development ("R&D") to accelerate commercialization, with applications spanning EVs, grid storage, and high-performance energy systems.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeOur project finance loans in China contain a spread of 115 basis points over the Loan Prime Rate in China and accordingly are exposed to movements in that reference rate. Therefore, interest expense going forward could be materially affected by changes in the market interest rates.
Biggest changeOur bonds payable bear fixed interest rates and are not publicly traded, limiting exposure to interest rate volatility. However, our project finance loans in China include an interest rate spread of 115 basis points over the Loan Prime Rate (LPR) in China, making them sensitive to market interest rate changes.
Holding other estimates constant, a hypothetical 100 basis points increase in the expected loss rate on the financing receivables portfolio would have resulted in an increase in the allowance for credit losses of approximately $0.8 million as of December 31, 2023.
Holding other factors constant, a hypothetical 100-basis-point increase in the expected loss rate on our financing receivables portfolio would have resulted in an increase in the allowance for credit losses of approximately $0.6 million as of December 31, 2024.
We have experienced and will continue to experience fluctuations in our operating results as a result of transaction gains and losses related to translating certain cash balances, trade accounts receivable and payable balances, and intercompany balances that are denominated in currencies other than the U.S. Dollar, principally RMB.
We have experienced, and will likely continue to experience, fluctuations in our operating results due to foreign exchange gains and losses. These fluctuations arise from the translation of cash balances, trade accounts receivable and payable, and intercompany balances denominated in currencies other than the U.S. Dollar, primarily RMB.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our cash and cash equivalents consist of cash and money market accounts. Such interest-earning instruments carry a degree of interest rate risk. To date, fluctuations in interest income have not been significant. In addition, our bonds payable bear interest at fixed rates and are not publicly traded.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk Our cash and cash equivalents primarily consist of cash deposits and money market accounts, which are subject to interest rate fluctuations. While these interest-earning instruments carry a degree of interest rate risk, historical fluctuations in interest income have not been material.
We do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our operating results or financial condition. In future periods, we will continue to evaluate our investment policy in order to ensure that we continue to meet our overall objectives.
We do not anticipate that a 100-basis-point increase or decrease in interest rates would have a material impact on our operating results or financial condition. We will continue to review and adjust our investment policy as needed to ensure it aligns with our risk management strategy and financial objectives.
The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. Because our cash equivalents have a short maturity, our portfolio’s fair value is relatively insensitive to interest rate changes.
Future movements in benchmark interest rates could materially impact our interest expenses. The primary objective of our investment activities is to preserve principal while optimizing returns, without significantly increasing risk. Due to the short maturity of our cash equivalents, our portfolio remains relatively insensitive to interest rate fluctuations.
Foreign Currency Risk We have a large operational presence in China and a significant amount of our transactions are currently denominated in RMB. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy.
Foreign Currency Risk Given our significant operational presence in China, a large portion of our transactions is denominated in RMB. The volatility of exchange rates is influenced by multiple macroeconomic factors, making it difficult to predict future fluctuations with certainty.
The effect of an immediate 10% adverse change in foreign exchange rates on RMB-denominated accounts as of December 31, 2023, including intercompany balances, would result in a foreign currency loss of $11.9 million.
A hypothetical 10% adverse change in foreign exchange rates for RMB-denominated accounts as of December 31, 2024, including intercompany balances, would have resulted in a foreign currency loss of approximately $15.2 million. As our foreign sales and expenses increase, our operating results may be further impacted by exchange rate fluctuations.
However, our limited operating history makes it difficult for us to judge the exact nature or extent of the seasonality of our business. 69 Table of Contents
However, due to our relatively limited operating history, it remains difficult to determine the exact extent or nature of seasonality in our business. We continue to monitor sales trends and market conditions to better understand the potential impact of seasonal demand fluctuations on our operations. 71 Table of Contents
In this regard, we consider that our credit risk is significantly reduced. Seasonality We have historically experienced higher sales during our third and fourth fiscal quarters as compared to our first and second fiscal quarters.
If necessary, we negotiate revised payment terms or settlement plans with customers facing financial difficulties. 70 Table of Contents Given our robust credit risk management practices, we consider our overall credit risk exposure to be significantly mitigated. Seasonality Historically, we have observed higher sales volumes in the third and fourth fiscal quarters, compared to the first and second quarters.
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In the event our foreign sales and expenses increase, our operating results may be more greatly affected by fluctuations in the exchange rates of the currencies in which we do business.
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At present, we do not utilize foreign exchange hedging instruments, but we may consider implementing derivative or financial instruments in the future to mitigate currency risk. However, the potential impact of such hedging activities on our financial performance remains uncertain. Credit Risk Our credit risk primarily relates to trade receivables, restricted cash, cash equivalents, and amounts due from related parties.
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At this time, we do not, but we may in the future, enter into derivatives or other 68 Table of Contents financial instruments in an attempt to hedge our foreign-currency exchange risk. It is difficult to predict the impact hedging activities would have on our results of operations.
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We typically extend credit only to customers and counterparties with strong credit ratings and actively monitor overdue accounts to minimize default risk. Our evaluation of credit risk exposure involves significant estimates and judgment.
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Credit Risk Our credit risk primarily relates to our trade and other receivables, restricted cash, cash equivalents and amounts due from related parties. We generally grant credit only to clients and related parties with good credit ratings and we also closely monitor overdue debts.
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To mitigate credit risk, we have a dedicated credit management team responsible for establishing credit limits, approving credit terms, and implementing collection strategies. At each reporting period, we review the recoverability of outstanding balances and ensure that adequate impairment provisions are recorded for potentially uncollectible amounts.
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In this regard, we consider that the credit risk arising from our balances with counterparties is significantly reduced. The assumptions used in evaluating our exposure to credit losses associated with our financing receivables portfolio involve estimates and significant judgment.
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In order to minimize the credit risk, we have delegated a team responsible for determining credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts.
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In addition, we review the recoverable amount of each individual debtor at the end of each reporting period to ensure that adequate impairment losses are made for irrecoverable amounts. We will negotiate with the counterparties of the debts for settlement plans or changes in credit terms, should the need arise.

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