UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~June~~September 30, 2023

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

For the transition period from to________________

Microvast Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware

001-38826

83-2530757

(State or other jurisdiction
of incorporation or organization)

(Commission File Number)

(IRS Employer
Identification No.)


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

(281) 491-9505

(Registrant’s telephone number, including area code)


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

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

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common stock, par value $0.0001 per share

MVST

The Nasdaq Stock Market LLC

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

MVSTW

The Nasdaq Stock Market LLC

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

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

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


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

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

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

As of ~~August 2,~~November 6, 2023, there were ~~316,307,715~~316,534,825 shares of the Company’s common stock, par value $0.0001, issued and outstanding.

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MICROVAST HOLDINGS, INC.

FORM 10-Q

For the Quarter Ended ~~June~~September 30, 2023

Table of Contents


		Page
PART I. FINANCIAL INFORMATION		1

Item 1.	Financial Statements (Unaudited)	1

	Unaudited Condensed Consolidated Balance Sheets	1

	Unaudited Condensed Consolidated Statements of Operations	3

	Unaudited Condensed Consolidated Statements of Comprehensive Loss	4

	Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity	5

	Unaudited Condensed Consolidated Statements of Cash Flows	7

	Notes to Unaudited Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2829

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3839

Item 4.	Controls and Procedures	3940

PART II. OTHER INFORMATION		4041

Item 1.	Legal Proceedings	4041

Item 1A.	Risk Factors	4041

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	4041

Item 3.	Defaults Upon Senior Securities	4041

Item 4.	Mine Safety Disclosures	4041

Item 5.	Other Information	4041

Item 6.	Exhibits	4142

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

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

•risks of operations in China;

•the impact of ~~inflation;~~inflation and rising interest rates;

•changes in availability and price of raw materials;

•changes in the markets that we target;

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

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

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

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

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

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

•risk of any cyber security threat or event and the effectiveness of our information technology systems to detect and defend against cyber attacks;

•economic, financial and other impacts of public health crises, including pandemics (such as COVID-19) and epidemics and any related company or government policies or actions; and

•the ongoing ~~conflict~~conflicts between Russia and Ukraine and the latest conflicts between Israel and Hamas, acts of terrorism, other catastrophic events and any restrictive actions that have been or may be taken by the U.S. and/or other countries in response thereto, such as sanctions or export controls.

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

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

~~Table of Contents~~

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

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

iii

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

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


		December 31, 2022		June 30, 2023			December 31, 2022		September 30, 2023
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	231,420	$	142,766	Cash and cash equivalents	$	231,420	$	67,398
Restricted cash, current	Restricted cash, current	70,732		27,542		Restricted cash, current	70,732		21,803
Short-term investments	Short-term investments	25,070		25,490		Short-term investments	25,070		25,496
Accounts receivable (net of allowance for credit losses of $4,407 and $3,468 as of December 31, 2022 and June 30, 2023, respectively)		119,304		106,094
Accounts receivable (net of allowance for credit losses of $4,407 and $3,242 as of December 31, 2022 and September 30, 2023, respectively)						Accounts receivable (net of allowance for credit losses of $4,407 and $3,242 as of December 31, 2022 and September 30, 2023, respectively)	119,304		116,300
Notes receivable	Notes receivable	2,196		17,724		Notes receivable	2,196		20,161
Inventories, net	Inventories, net	84,252		86,760		Inventories, net	84,252		126,913
Prepaid expenses and other current assets	Prepaid expenses and other current assets	12,093		20,620		Prepaid expenses and other current assets	12,093		25,840
Total Current Assets	Total Current Assets	545,067		426,996		Total Current Assets	545,067		403,911
Restricted cash, non-current	Restricted cash, non-current	465		11		Restricted cash, non-current	465		11
Property, plant and equipment, net	Property, plant and equipment, net	335,140		497,847		Property, plant and equipment, net	335,140		549,544
Land use rights, net	Land use rights, net	12,639		11,878		Land use rights, net	12,639		11,734
Acquired intangible assets, net	Acquired intangible assets, net	1,636		3,343		Acquired intangible assets, net	1,636		3,210
Operating lease right-of-use assets	Operating lease right-of-use assets	16,368		21,001		Operating lease right-of-use assets	16,368		19,612
Other non-current assets	Other non-current assets	73,642		36,596		Other non-current assets	73,642		28,540
Total Assets	Total Assets	$	984,957	$	997,672	Total Assets	$	984,957	$	1,016,562

Liabilities	Liabilities					Liabilities
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	44,985	$	54,319	Accounts payable	$	44,985	$	95,294
Notes payable	Notes payable	68,441		50,114		Notes payable	68,441		39,329
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	66,720		116,449		Accrued expenses and other current liabilities	66,720		121,816
Advance from customers	Advance from customers	54,207		53,058		Advance from customers	54,207		54,482
Short-term bank borrowings	Short-term bank borrowings	17,398		18,117		Short-term bank borrowings	17,398		24,818
Income tax payables	Income tax payables	658		653		Income tax payables	658		652
Total Current Liabilities	Total Current Liabilities	252,409		292,710		Total Current Liabilities	252,409		336,391
Long-term bonds payable	Long-term bonds payable	43,888		43,888		Long-term bonds payable	43,888		43,888
Long-term bank borrowings	Long-term bank borrowings	28,997		31,029		Long-term bank borrowings	28,997		30,839
Warrant liability	Warrant liability	126		109		Warrant liability	126		151
Share-based compensation liability	Share-based compensation liability	131		170		Share-based compensation liability	131		187
Operating lease liabilities	Operating lease liabilities	14,347		18,003		Operating lease liabilities	14,347		16,951
Other non-current liabilities	Other non-current liabilities	32,082		32,046		Other non-current liabilities	32,082		20,817
Total Liabilities	Total Liabilities	$	371,980	$	417,955	Total Liabilities	$	371,980	$	449,224
Commitments and contingencies (Note 16)	Commitments and contingencies (Note 16)					Commitments and contingencies (Note 16)

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - continued

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


		December 31, 2022		June 30, 2023			December 31, 2022		September 30, 2023
Shareholders’ Equity	Shareholders’ Equity					Shareholders’ Equity
Common Stock (par value of US$0.0001 per share, 750,000,000 and 750,000,000 shares authorized as of December 31, 2022 and June 30, 2023; 309,316,011 and 309,626,443 shares issued, and 307,628,511 and 307,938,943 shares outstanding as of December 31, 2022 and June 30, 2023)		$	31	$	31
Common Stock (par value of US$0.0001 per share, 750,000,000 and 750,000,000 shares authorized as of December 31, 2022 and September 30, 2023; 309,316,011 and 316,534,825 shares issued, and 307,628,511 and 314,847,325 shares outstanding as of December 31, 2022 and September 30, 2023)						Common Stock (par value of US$0.0001 per share, 750,000,000 and 750,000,000 shares authorized as of December 31, 2022 and September 30, 2023; 309,316,011 and 316,534,825 shares issued, and 307,628,511 and 314,847,325 shares outstanding as of December 31, 2022 and September 30, 2023)	$	31	$	32
Additional paid-in capital	Additional paid-in capital	1,416,160		1,452,189		Additional paid-in capital	1,416,160		1,468,173
Statutory reserves	Statutory reserves	6,032		6,032		Statutory reserves	6,032		6,032
Accumulated deficit	Accumulated deficit	(791,165)		(846,835)		Accumulated deficit	(791,165)		(872,965)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(18,081)		(33,745)		Accumulated other comprehensive loss	(18,081)		(35,925)
Total Microvast Holding, Inc. shareholders’ equity	Total Microvast Holding, Inc. shareholders’ equity	612,977		577,672		Total Microvast Holding, Inc. shareholders’ equity	612,977		565,347
Noncontrolling interests	Noncontrolling interests	$	—	$	2,045	Noncontrolling interests	$	—	$	1,991
Total Equity	Total Equity	$	612,977	$	579,717	Total Equity	$	612,977	$	567,338
Total Liabilities and Equity	Total Liabilities and Equity	$	984,957	$	997,672	Total Liabilities and Equity	$	984,957	$	1,016,562

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

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2023		2022		2023			2022		2023		2022		2023
Revenues	Revenues	$	64,414	$	74,953	$	101,082	$	121,926	Revenues	$	38,616	$	80,116	$	139,698	$	202,042
Cost of revenues	Cost of revenues	(59,573)		(63,492)		(96,228)		(105,607)		Cost of revenues	(36,623)		(62,232)		(132,851)		(167,839)
Gross profit	Gross profit	4,841		11,461		4,854		16,319		Gross profit	1,993		17,884		6,847		34,203
Operating expenses:	Operating expenses:									Operating expenses:
General and administrative expenses	General and administrative expenses	(34,335)		(23,560)		(60,436)		(43,945)		General and administrative expenses	(22,585)		(25,402)		(83,021)		(69,347)
Research and development expenses	Research and development expenses	(10,244)		(9,507)		(21,553)		(20,368)		Research and development expenses	(11,457)		(13,241)		(33,010)		(33,609)
Selling and marketing expenses	Selling and marketing expenses	(5,810)		(5,897)		(11,808)		(10,885)		Selling and marketing expenses	(5,561)		(6,031)		(17,369)		(16,916)
Total operating expenses	Total operating expenses	(50,389)		(38,964)		(93,797)		(75,198)		Total operating expenses	(39,603)		(44,674)		(133,400)		(119,872)
Subsidy income	Subsidy income	576		637		713		714		Subsidy income	520		442		1,233		1,156
Loss from operations	Loss from operations	(44,972)		(26,866)		(88,230)		(58,165)		Loss from operations	(37,090)		(26,348)		(125,320)		(84,513)
Other income and expenses:	Other income and expenses:									Other income and expenses:
Interest income	Interest income	420		1,518		734		2,899		Interest income	870		582		1,604		3,481
Interest expense	Interest expense	(895)		(487)		(1,691)		(946)		Interest expense	(774)		(491)		(2,465)		(1,437)
Changes in fair value of warrant liability	Changes in fair value of warrant liability	1,255		—		820		17		Changes in fair value of warrant liability	101		(42)		921		(25)
Other income, net	Other income, net	10		(243)		409		546		Other income, net	349		127		758		673
Loss before provision for income taxes	Loss before provision for income taxes	(44,182)		(26,078)		(87,958)		(55,649)		Loss before provision for income taxes	(36,544)		(26,172)		(124,502)		(81,821)
Income tax expense	Income tax expense	—		—		—		—		Income tax expense	—		—		—		—
Net loss	Net loss	$	(44,182)	$	(26,078)	$	(87,958)	$	(55,649)	Net loss	$	(36,544)	$	(26,172)	$	(124,502)	$	(81,821)
Less: net income attributable to noncontrolling interests		—		11		—		21
Less: net loss attributable to noncontrolling interests										Less: net loss attributable to noncontrolling interests	—		(42)		—		(21)
Net loss attributable to Microvast Holdings, Inc.'s shareholders	Net loss attributable to Microvast Holdings, Inc.'s shareholders	$	(44,182)	$	(26,089)	$	(87,958)	$	(55,670)	Net loss attributable to Microvast Holdings, Inc.'s shareholders	$	(36,544)	$	(26,130)	$	(124,502)	$	(81,800)
Net loss per common share	Net loss per common share									Net loss per common share
Basic and diluted	Basic and diluted	$	(0.15)	$	(0.08)	$	(0.29)	$	(0.18)	Basic and diluted	$	(0.12)	$	(0.08)	$	(0.41)	$	(0.26)
Weighted average shares used in calculating net loss per share of common stock	Weighted average shares used in calculating net loss per share of common stock									Weighted average shares used in calculating net loss per share of common stock
Basic and diluted	Basic and diluted	300,565,515		307,742,032		299,709,069		307,728,460		Basic and diluted	305,977,372		313,108,457		301,821,464		309,541,499

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

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2023		2022		2023			2022		2023		2022		2023
Net loss	Net loss	$	(44,182)	$	(26,078)	$	(87,958)	$	(55,649)	Net loss	$	(36,544)	$	(26,172)	$	(124,502)	$	(81,821)
Foreign currency translation adjustment	Foreign currency translation adjustment	(17,596)		(18,002)		(16,610)		(15,814)		Foreign currency translation adjustment	(21,002)		(2,192)		(37,612)		(18,006)
Comprehensive loss	Comprehensive loss	$	(61,778)	$	(44,080)	$	(104,568)	$	(71,463)	Comprehensive loss	$	(57,546)	$	(28,364)	$	(162,114)	$	(99,827)
Comprehensive income attributable to non-controlling interests		—		(107)		—		(129)
Comprehensive loss attributable to non-controlling interests										Comprehensive loss attributable to non-controlling interests	—		(54)		—		(183)
Total comprehensive loss attributable to Microvast Holding, Inc.'s shareholders	Total comprehensive loss attributable to Microvast Holding, Inc.'s shareholders	$	(61,778)	$	(43,973)	$	(104,568)	$	(71,334)	Total comprehensive loss attributable to Microvast Holding, Inc.'s shareholders	$	(57,546)	$	(28,310)	$	(162,114)	$	(99,644)

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

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ (DEFICIT)/EQUITY

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


		Three Months Ended June 30, 2022																				Three Months Ended September 30, 2022
		Common Stock			Additional paid-in capital				Accumulated deficit		Accumulated other Comprehensive Income (loss)			Statutory reserves				Total Microvast Holdings, Inc. Shareholders’ Equity				Common Stock					Additional paid-in capital				Accumulated deficit				Accumulated other Comprehensive loss				Statutory reserves				Total Microvast Holdings, Inc. Shareholders’ Equity
		Shares	Amount										Shares								Amount

Balance as of March 31, 2022		298,851,140	$	30			$	1,320,367			$	(676,741)				$	7,687			$	6,032		$	657,375
Balance as of June 30, 2022																					Balance as of June 30, 2022	300,859,266			$	30			$	1,378,774			$	(720,923)			$	(9,909)			$	6,032			$	654,004
Net loss	Net loss	—	—		—				(44,182)		—			—				(44,182)			Net loss	—			—		—				(36,544)				—				—				(36,544)
Issuance of common stock in connection with vesting of restricted stock units		2,008,126	—		—				—		—			—				—
Issuance of common stock in connection with vesting of share-based awards																					Issuance of common stock in connection with vesting of share-based awards	6,745,301			1		(1)				—				—				—				—
Share-based compensation	Share-based compensation	—	—		58,407				—		—			—				58,407			Share-based compensation	—			—		19,398				—				—				—				19,398
Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—				—		(17,596)			—				(17,596)			Foreign currency translation adjustments	—			—		—				—				(21,002)				—				(21,002)
Balance as of June 30, 2022		300,859,266	$	30	$	1,378,774			$	(720,923)	$	(9,909)		$	6,032			$	654,004
Balance as of September 30, 2022																					Balance as of September 30, 2022	307,604,567			$	31	$	1,398,171			$	(757,467)			$	(30,911)			$	6,032			$	615,856


		Six Months Ended June 30, 2022																				Nine Months Ended September 30, 2022
		Common Stock			Additional paid-in capital				Accumulated deficit		Accumulated other Comprehensive Income (loss)			Statutory reserves				Total Microvast Holdings, Inc. Shareholders’ Equity				Common Stock						Additional paid-in capital					Accumulated deficit					Accumulated other Comprehensive Income (loss)					Statutory reserves					Total Microvast Holdings, Inc. Shareholders’ Equity
		Shares	Amount										Shares								Amount

Balance as of December 31, 2021	Balance as of December 31, 2021	298,843,016	$	30			$	1,306,034			$	(632,099)				$	6,701			$	6,032		$	686,698	Balance as of December 31, 2021		298,843,016				$	30				$	1,306,034				$	(632,099)				$	6,701				$	6,032	$	686,698
Net loss	Net loss	—	—		—				(87,958)		—			—				(87,958)			Net loss	—			—					—					(124,502)					—					—					(124,502)
Cumulative effect adjustment related to opening retained earnings for adoption of ASU2016-13, Financial instruments- Credit losses (Topic 326)	Cumulative effect adjustment related to opening retained earnings for adoption of ASU2016-13, Financial instruments- Credit losses (Topic 326)	—	—		—				(866)		—			—				(866)			Cumulative effect adjustment related to opening retained earnings for adoption of ASU2016-13, Financial instruments- Credit losses (Topic 326)	—			—			—					(866)					—					—					(866)
Issuance of common stock in connection with vesting of restricted stock units		2,016,250	—		—				—		—			—				—
Issuance of common stock in connection with vesting of share-based awards																					Issuance of common stock in connection with vesting of share-based awards	8,761,551			1			(1)					—					—					—					—
Share-based compensation	Share-based compensation	—	—		72,740				—		—			—				72,740			Share-based compensation	—			—			92,138					—					—					—					92,138
Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—				—		(16,610)			—				(16,610)			Foreign currency translation adjustments	—			—			—					—					(37,612)					—					(37,612)
Balance as of June 30, 2022		300,859,266	$	30	$	1,378,774			$	(720,923)	$	(9,909)		$	6,032			$	654,004
Balance as of September 30, 2022																					Balance as of September 30, 2022	307,604,567			$	31		$	1,398,171				$	(757,467)				$	(30,911)				$	6,032				$	615,856

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED 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)


		Three Months Ended June 30, 2023																												Three Months Ended September 30, 2023
		Common Stock			Additional paid-in capital				Accumulated deficit		Accumulated other Comprehensive Income (loss)				Statutory reserves					Total Microvast Holdings, Inc. Shareholders’ Equity			Non- controlling Interests				Total Equity			Common Stock				Additional paid-in capital		Accumulated deficit		Accumulated other Comprehensive loss		Statutory reserves		Total Microvast Holdings, Inc. Shareholders’ Equity		Non- controlling Interests		Total Equity
		Shares	Amount																Shares						Amount

Balance as of March 31, 2023		307,739,948	$	31			$	1,434,221					$	(820,746)			$	(15,861)				$	6,032			$	603,677			$	2,152	$	605,829
Balance as of June 30, 2023																													Balance as of June 30, 2023	307,938,943		$	31	$	1,452,189	$	(846,835)	$	(33,745)	$	6,032	$	577,672	$	2,045	$	579,717
Net loss	Net loss	—	—		—				(26,089)		—				—					(26,089)			11				(26,078)		Net loss	—		—		—		(26,130)		—		—		(26,130)		(42)		(26,172)
Issuance of common stock in connection with vesting of share-based awards	Issuance of common stock in connection with vesting of share-based awards	198,995	—		—				—		—				—					—			—				—		Issuance of common stock in connection with vesting of share-based awards	6,908,382		1		(1)		—		—		—		—		—		—
Share-based compensation	Share-based compensation	—	—		17,968				—		—				—					17,968			—				17,968		Share-based compensation	—		—		15,985		—		—		—		15,985		—		15,985
Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—				—		(17,884)				—					(17,884)			(118)				(18,002)		Foreign currency translation adjustments	—		—		—		—		(2,180)		—		(2,180)		(12)		(2,192)
Balance as of June 30, 2023		307,938,943	$	31	$	1,452,189			$	(846,835)	$	(33,745)			$	6,032				$	577,672		$	2,045			$	579,717
Balance as of September 30, 2023																													Balance as of September 30, 2023	314,847,325		$	32	$	1,468,173	$	(872,965)	$	(35,925)	$	6,032	$	565,347	$	1,991	$	567,338


		Six Months Ended June 30, 2023																												Nine Months Ended September 30, 2023
		Common Stock			Additional paid-in capital				Accumulated deficit		Accumulated other Comprehensive Income (loss)				Statutory reserves					Total Microvast Holdings, Inc. Shareholders’ Equity			Non-controlling Interests				Total Equity			Common Stock						Additional paid-in capital			Accumulated deficit			Accumulated other Comprehensive loss			Statutory reserves			Total Microvast Holdings, Inc. Shareholders’ Equity			Non-controlling Interests			Total Equity
		Shares	Amount																Shares						Amount

Balance as of December 31, 2022	Balance as of December 31, 2022	307,628,511	$	31			$	1,416,160					$	(791,165)			$	(18,081)				$	6,032			$	612,977			$	—	$	612,977	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	Net loss	—	—		—				(55,670)		—				—					(55,670)			21				(55,649)		Net loss	—		—				—			(81,800)			—			—			(81,800)			(21)			(81,821)
Capital contribution from non-controlling interests	Capital contribution from non-controlling interests	—	—		—				—		—				—					—			2,174				2,174		Capital contribution from non-controlling interests	—		—				—			—			—			—			—			2,174			2,174
Issuance of common stock in connection with vesting of share-based awards	Issuance of common stock in connection with vesting of share-based awards	310,432	—		—				—		—				—					—			—				—		Issuance of common stock in connection with vesting of share-based awards	7,218,814		1				(1)			—			—			—			—			—			—
Share-based compensation	Share-based compensation	—	—		36,029				—		—				—					36,029			—				36,029		Share-based compensation	—		—				52,014			—			—			—			52,014			—			52,014
Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—				—		(15,664)				—					(15,664)			(150)				(15,814)		Foreign currency translation adjustments	—		—				—			—			(17,844)			—			(17,844)			(162)			(18,006)
Balance as of June 30, 2023		307,938,943	$	31	$	1,452,189			$	(846,835)	$	(33,745)			$	6,032				$	577,672		$	2,045			$	579,717
Balance as of September 30, 2023																													Balance as of September 30, 2023	314,847,325		$	32			$	1,468,173		$	(872,965)		$	(35,925)		$	6,032		$	565,347		$	1,991		$	567,338

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

Table of Contents

MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

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


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2023			2022		2023
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net loss	Net loss	$	(87,958)	$	(55,649)	Net loss	$	(124,502)	$	(81,821)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Loss on disposal of property, plant and equipment	Loss on disposal of property, plant and equipment	13		826		Loss on disposal of property, plant and equipment	11		832
Depreciation of property, plant and equipment	Depreciation of property, plant and equipment	10,377		9,797		Depreciation of property, plant and equipment	15,161		14,643
Amortization of land use right and intangible assets	Amortization of land use right and intangible assets	283		399		Amortization of land use right and intangible assets	420		593
Noncash lease expenses	Noncash lease expenses	1,112		1,465		Noncash lease expenses	1,662		2,108
Share-based compensation	Share-based compensation	53,650		35,779		Share-based compensation	72,925		51,641
Changes in fair value of warrant liability	Changes in fair value of warrant liability	(820)		(17)		Changes in fair value of warrant liability	(921)		25
Reversal of credit losses		380		(832)
Allowance/(reversal) of credit losses						Allowance/(reversal) of credit losses	337		(1,038)
Provision for obsolete inventories	Provision for obsolete inventories	1,919		928		Provision for obsolete inventories	3,148		928
Impairment loss from property, plant and equipment	Impairment loss from property, plant and equipment	493		51		Impairment loss from property, plant and equipment	1,546		473
Product warranty	Product warranty	6,235		5,450		Product warranty	8,263		9,017
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Notes receivable	Notes receivable	(20,647)		(19,808)		Notes receivable	1,386		(22,372)
Accounts receivable	Accounts receivable	(21,856)		10,251		Accounts receivable	(5,024)		(911)
Inventories	Inventories	(15,906)		(16,610)		Inventories	(39,517)		(54,473)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	1,689		(6,842)		Prepaid expenses and other current assets	(3,764)		(12,666)
Amounts due from/to related parties	Amounts due from/to related parties	85		—		Amounts due from/to related parties	85		—
Operating lease right-of-use assets	Operating lease right-of-use assets	(19,260)		(5,850)		Operating lease right-of-use assets	(19,284)		(5,588)
Other non-current assets	Other non-current assets	111		199		Other non-current assets	216		(653)
Notes payable	Notes payable	19,237		(15,517)		Notes payable	19,942		(26,070)
Accounts payable	Accounts payable	808		11,771		Accounts payable	(529)		53,400
Advance from customers	Advance from customers	3,230		(968)		Advance from customers	5,608		515
Accrued expenses and other liabilities	Accrued expenses and other liabilities	(13,704)		1,020		Accrued expenses and other liabilities	(12,203)		(1,374)
Operating lease liabilities	Operating lease liabilities	15,838		3,364		Operating lease liabilities	15,389		2,760
Other non-current liabilities	Other non-current liabilities	1,156		(215)		Other non-current liabilities	1,050		(319)
Net cash used in operating activities	Net cash used in operating activities	(63,535)		(41,008)		Net cash used in operating activities	(58,595)		(70,350)

Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(67,915)		(93,630)		Purchases of property, plant and equipment	(84,722)		(153,574)
Purchase of short-term investments	Purchase of short-term investments	—		(419)		Purchase of short-term investments	—		(425)
Proceeds on disposal of property, plant and equipment	Proceeds on disposal of property, plant and equipment	2		648		Proceeds on disposal of property, plant and equipment	3		879
Net cash used in investing activities	Net cash used in investing activities	(67,913)		(93,401)		Net cash used in investing activities	(84,719)		(153,120)

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities
Proceeds from borrowings	Proceeds from borrowings	13,466		9,232		Proceeds from borrowings	58,708		18,439
Repayment of bank borrowings	Repayment of bank borrowings	(17,332)		(3,939)		Repayment of bank borrowings	(24,482)		(6,286)
Net cash generated from financing activities	Net cash generated from financing activities	(3,866)		5,293		Net cash generated from financing activities	34,226		12,153
Effect of exchange rate changes	Effect of exchange rate changes	(3,863)		(3,182)		Effect of exchange rate changes	(11,322)		(2,088)
Decrease in cash, cash equivalents and restricted cash	Decrease in cash, cash equivalents and restricted cash	(139,177)		(132,298)		Decrease in cash, cash equivalents and restricted cash	(120,410)		(213,405)
Cash, cash equivalents and restricted cash at beginning of the period	Cash, cash equivalents and restricted cash at beginning of the period	536,109		302,617		Cash, cash equivalents and restricted cash at beginning of the period	536,109		302,617
Cash, cash equivalents and restricted cash at end of the period	Cash, cash equivalents and restricted cash at end of the period	$	396,932	$	170,319	Cash, cash equivalents and restricted cash at end of the period	$	415,699	$	89,212

Table of Contents

MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - continued

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


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2023			2022		2023
Reconciliation to amounts on unaudited condensed consolidated balance sheets	Reconciliation to amounts on unaudited condensed consolidated balance sheets					Reconciliation to amounts on unaudited condensed consolidated balance sheets
Cash and cash equivalents	Cash and cash equivalents	$	333,867	$	142,766	Cash and cash equivalents	$	295,816	$	67,398
Restricted cash	Restricted cash	63,065		27,553		Restricted cash	119,883		21,814
Total cash, cash equivalents and restricted cash	Total cash, cash equivalents and restricted cash	$	396,932	$	170,319	Total cash, cash equivalents and restricted cash	$	415,699	$	89,212


Non-cash investing and financing activities	Non-cash investing and financing activities					Non-cash investing and financing activities
Payable for purchase of property, plant and equipment	Payable for purchase of property, plant and equipment	$	28,755	$	82,968	Payable for purchase of property, plant and equipment	$	38,044	$	75,781

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

Table of Contents

MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS

Microvast, Inc. was incorporated under the laws of the State of Texas in the United States of America on October 12, 2006 and re-domiciled to the State of Delaware on December 31, 2015. On July 23, 2021 (the “Closing Date”), Microvast, Inc. and Tuscan Holdings Corp.(“Tuscan”) consummated the previously announced merger (the “Merger” or the "Business Combination"), pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated February 1, 2021, between Tuscan, Microvast, Inc. and TSCN Merger Sub Inc., a Delaware corporation (“Merger Sub”).

Pursuant to the Merger Agreement, the Merger Sub merged with and into Microvast, Inc., with Microvast, Inc. surviving the Merger. As a result of the Merger, Tuscan was renamed “Microvast Holdings, Inc.” (the “Company”). The Merger was accounted for as a reverse recapitalization as Microvast, Inc. was determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”).

The Company and its subsidiaries (collectively, the “Group”) are primarily engaged in developing, manufacturing, and selling electronic power products for electric vehicles and energy storage across the globe.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and use of estimates

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries. The unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Security and Exchange Commission (the "SEC") and U.S. generally accepted accounting standards (“U.S. GAAP”) for interim financial reporting. Accordingly, certain information and disclosures normally included in the notes to the annual financial statements prepared in accordance with U.S. GAAP have been omitted from these interim financial statements.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the period ended December 31, 2022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 16, 2023, which provides a more complete discussion of the Company’s accounting policies and certain other information. In the opinion of the management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments (which include normal recurring adjustments) necessary for a fair statement of financial results for the interim periods presented. The Company believes that the disclosures are adequate to make the information presented not misleading.

The results of operations for the three and ~~six~~nine months ended ~~June~~September 30, 2023 are not necessarily indicative of the results to be expected for any subsequent quarter or for the fiscal year ending December 31, 2023.

The financial information as of December 31, 2022 included on the condensed consolidated balance sheets is derived from the Group’s audited consolidated financial statements for the year ended December 31, 2022.

~~There have been no significant changes~~As of September 30, 2023, the Company had working capital of $67,520, a shareholders’ equity of $567,338, including an accumulated deficit of $872,965. For the nine months ended September 30, 2023, the Company incurred losses amounting to $81,821 and generated negative cash flows from operating activities amounting to $70,350. For the ~~significant accounting policies disclosed in Note 2 of the audited consolidated financial statements for the years~~year ended December 31, ~~2022.~~2022, the Company incurred losses amounting to $158,200 and generated negative cash flows from operating activities amounting to $53,928. The Company believes that it will have adequate sources of liquidity and capital resources to fund our operating and investing activities at least for the next twelve months as a result of among others, the below factors:

~~Significant accounting estimates reflected in~~

•As of September 30, 2023, the ~~Group’s financial statements include allowance~~Company had a backlog of approximately $678,681 and with the completion of its Huzhou Phase 3.1 2GWh cell, module and pack production line, the Company has the capacity to meet growing demand, especially for credit losses, provision for obsolete inventories, impairment of long-lived assets, valuation allowance for deferred tax assets, product warranty, fair value measurement of warrant liability and share based compensation.its 53.5Ah cell technology;

~~All intercompany transactions and balances have been eliminated upon consolidation.~~

Table of Contents

MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued

•The Company has approximately $70,364 (RMB500 million) available to drawdown under its $111,483 (RMB800 million) project finance loan that it entered into on September 27, 2022, and with the extension of the availability period under this loan to June 9, 2024, the Company has funding in place to support further expansions in capacity at the Huzhou facility.

•The Company has $240,655 property, plant and equipment in the United States and no borrowing has been incurred, so far, for its operations in the United States. With this growing asset base, the Company is considering new debt financing to support its expansion plans in the United States and is currently in negotiations with lenders.

There have been no significant changes to the significant accounting policies disclosed in Note 2 of the audited consolidated financial statements for the years ended December 31, 2022.

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 warranty, fair value measurement of warrant liability and share based compensation.

All intercompany transactions and balances have been eliminated upon consolidation.

Emerging Growth Company

Pursuant to the JOBS Act, an emerging growth company (the “EGC”) may adopt new or revised accounting standards that may be issued by FASB or the SEC either (i) within the same periods as those otherwise applicable to non-EGCs or (ii) within the same time periods as private companies. The Company intends to take advantage of the exemption for complying with new or revised accounting standards within the same time periods as private companies. Accordingly, the information contained herein may be different than the information provided by other public companies.

The Company also intends to take advantage of some of the reduced regulatory and reporting requirements of EGCs pursuant to the JOBS Act so long as the Company qualifies as an EGC, including, but not limited to, an exemption from the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.

Revenue recognition

Nature of Goods and Services

The Group’s revenue consists primarily of sales of lithium-ion batteries. The obligation of the Group is to provide the battery products. Revenue is recognized at the point of time when control of the promised goods or services is transferred to the customer, in an amount that reflects the consideration the Group expects to be entitled to in exchange for the goods or services.

Table of Contents

MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued

Revenue recognition - continued

Disaggregation of revenue

For the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2023, the Group derived revenues from geographic regions as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2023		2022		2023			2022		2023		2022		2023
People’s Republic of China ("PRC")	People’s Republic of China ("PRC")	$	33,946	$	46,122	$	53,784	$	78,734	People’s Republic of China ("PRC")	$	26,542	$	36,289	$	80,326	$	115,023
Other Asia & Pacific countries	Other Asia & Pacific countries	24,622		18,520		38,026		21,669		Other Asia & Pacific countries	7,394		24,611		45,420		46,280
Asia & Pacific	Asia & Pacific	58,568		64,642		91,810		100,403		Asia & Pacific	33,936		60,900		125,746		161,303
Europe	Europe	4,880		9,337		7,631		19,522		Europe	3,432		19,034		11,062		38,556
U.S.	U.S.	966		974		1,641		2,001		U.S.	1,248		182		2,890		2,183
Total	Total	$	64,414	$	74,953	$	101,082	$	121,926	Total	$	38,616	$	80,116	$	139,698	$	202,042

Contract balances

Contract balances include accounts receivable and advances from customers. Accounts receivable represent cash not received from customers and are recorded when the rights to consideration are unconditional. The allowance for credit losses reflects the best estimate of probable losses inherent to the accounts receivable balance. Contract liabilities, recorded in advance from customers in the consolidated balance sheets, represent payment received in advance or payment received related to a material right provided to a customer to acquire additional goods or services at a discount in a future period. During the three months ended ~~June~~September 30, 2022 and 2023, the Group recognized ~~$70~~$722 and ~~$1,068~~$1,191 of revenue previously included in advance from customers as of ~~April~~July 1, 2022 and ~~April~~July 1, 2023, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023, the Group recognized ~~$549~~$550 and $2,485 of revenue previously included in advance from customers as of January 1, 2022 and January 1, 2023, respectively.

~~Table of Contents~~

~~MICROVAST HOLDINGS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2023~~

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

~~NOTE 2. 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.

For share-based awards granted with a performance condition, the compensation cost is recognized when it is probable that the performance condition will be achieved. The Company reassesses the probability of achieving the performance condition at the end of each reporting date and records a cumulative catch-up adjustment for any changes to its assessment. For performance-based awards with a market condition, such as awards using total shareholder return (“TSR”) as a performance metric, 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. Liability-classified awards are remeasured at their fair-value-based measurement as of each reporting date until settlement. Forfeitures are recognized as they occur.

Table of Contents

MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued

Operating leases

As of ~~June~~September 30, 2023, the Company recorded operating lease right-of-use (ROU) assets of ~~$21,001~~$19,612 and operating lease liabilities of ~~$20,949,~~$19,366, including current portion in the amount of ~~$2,946,~~$2,415, which was recorded under accrued expenses and other current liabilities on the balance sheet.

The Company determines if an arrangement is a lease or contains a lease at lease inception. Operating leases are required to record in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. The Company has elected the package of practical expedients, which allows the Company not to reassess (1) whether any expired or existing contracts as of the adoption date are or contain a lease, (2) lease classification for any expired or existing leases as of the adoption date and (3) initial direct costs for any expired or existing leases as of the adoption date. The Company also elected the practical expedient not to separate lease and non-lease components of contracts. Lastly, for lease assets other than real estate, such as printing machines and electronic appliances, the Company elected the short-term lease exemption as their lease terms are 12 months or less.

As the rate implicit in the lease is not readily determinable, the Company estimates its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is estimated in a portfolio approach to approximate the interest rate on a collateralized basis with similar terms and payments in a similar economic environment. Lease expense is recorded on a straight-line basis over the lease term.

Warrant Liability

The Company accounts for warrants in accordance with the guidance contained in ASC 815-40 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. As the Private Warrants (as defined in Note 11 – Warrants) meet the definition of a derivative as contemplated in ASC 815, the Company classifies the Private Warrants as liabilities. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the condensed statements of operations. The Private Warrants are valued using a Monte Carlo simulation model on the basis of the quoted market price of Public Warrants (as defined in Note 11 – Warrants).

~~Table of Contents~~

~~MICROVAST HOLDINGS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2023~~

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

~~NOTE 2. SIGNIFICANT ACCOUNTING POLICIES - continued~~

Recent accounting pronouncements not yet adopted

In August 2020, the FASB issued ASU 2020-06, “Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)-Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.” The ASU simplifies accounting for convertible instruments by removing major separation models required under current GAAP. Consequently, more convertible debt instruments will be reported as a single liability instrument with no separate accounting for embedded conversion features. The ASU removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contracts to qualify for it. The ASU also simplifies the diluted net income per share calculation in certain areas. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December 15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently evaluating the impact that ASU 2020-06 may have on the condensed consolidated financial statements and related disclosures.

Table of Contents

MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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

NOTE 3. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following:


		December 31, 2022		June 30, 2023			December 31, 2022		September 30, 2023
Accounts receivable	Accounts receivable	$	123,711	$	109,562	Accounts receivable	$	123,711	$	119,542
Allowance for credit losses	Allowance for credit losses	(4,407)		(3,468)		Allowance for credit losses	(4,407)		(3,242)
Accounts receivable, net	Accounts receivable, net	$	119,304	$	106,094	Accounts receivable, net	$	119,304	$	116,300

Movement of allowance for credit losses was as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2023		2022		2023			2022		2023		2022		2023
Balance at beginning of the period	Balance at beginning of the period	$	5,354	$	3,270	$	5,005	$	4,407	Balance at beginning of the period	$	5,828	$	3,468	$	5,005	$	4,407
Cumulative-effect adjustment upon adoption of ASU2016-13, Financial instruments- Credit losses (Topic 326)	Cumulative-effect adjustment upon adoption of ASU2016-13, Financial instruments- Credit losses (Topic 326)	—		—		866		—		Cumulative-effect adjustment upon adoption of ASU2016-13, Financial instruments- Credit losses (Topic 326)	—		—		866		—
Charges (Reversal) of expenses	Charges (Reversal) of expenses	925		262		380		(832)		Charges (Reversal) of expenses	(43)		(206)		337		(1,038)
Write off	Write off	(153)		—		(153)		(66)		Write off	(12)		—		(165)		(66)
Recoveries of credit losses	Recoveries of credit losses	—		121		—		121		Recoveries of credit losses	—		—		—		121
Exchange difference	Exchange difference	(298)		(185)		(270)		(162)		Exchange difference	(337)		(20)		(607)		(182)
Balance at end of the period	Balance at end of the period	$	5,828	$	3,468	$	5,828	$	3,468	Balance at end of the period	$	5,436	$	3,242	$	5,436	$	3,242

NOTE 4. INVENTORIES

Inventories consisted of the following:


	December 31, 2022		September 30, 2023
Work in process	$	48,747	$	78,215
Raw materials	29,331		32,969
Finished goods	6,174		15,729
Total	$	84,252	$	126,913

Provision for obsolete inventories at $1,229 and $0 were recognized for the three months ended September 30, 2022 and 2023, respectively. Provision for obsolete inventories at $3,148 and $928 were recognized for the nine months ended September 30, 2022 and 2023, respectively.

1213

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

~~NOTE 4. INVENTORIES~~

~~Inventories consisted of the following:~~

December 31,
2022 June 30,
2023
Work in process $ 48,747 $ 49,333
Raw materials 29,331 20,347
Finished goods 6,174 17,080
Total $ 84,252 $ 86,760

Provision for obsolete inventories at $1,448 and $928 were recognized for the three months ended June 30, 2022 and 2023, respectively. Provision for obsolete inventories at $1,919 and $928 were recognized for the six months ended June 30, 2022 and 2023, respectively.

NOTE 5. ACQUIRED INTANGIBLE ASSETS, NET


		December 31, 2022		June 30, 2023			December 31, 2022		September 30, 2023
Cost of acquired intangible assets	Cost of acquired intangible assets	$	3,493	$	5,420	Cost of acquired intangible assets	$	3,493	$	5,405
Less: accumulated amortization	Less: accumulated amortization	(1,857)		(2,077)		Less: accumulated amortization	(1,857)		(2,195)
Acquired intangible assets, net	Acquired intangible assets, net	$	1,636	$	3,343	Acquired intangible assets, net	$	1,636	$	3,210

In December, 2022, Microvast Inc. set up a new subsidiary named Microvast Precision Works Co., Ltd ("MPW") together with a third party (the "NCI"). In the first quarter of 2023, the Company invested cash of $5,072 in MPW to hold a 70% shareholding, and the NCI injected patents with a total value of $2,174 for the remaining 30% shareholding. Such patents received are recorded as intangible assets.

The Group recorded amortization expense of $61 and ~~$120~~$122 for the three months ended ~~June~~September 30, 2022 and 2023, respectively, and ~~$122~~$183 and ~~$249~~$371 for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023, respectively. No impairment losses were recognized for the three and ~~six~~nine months ended ~~June~~September 30, 2022 and 2023.

The annual amortization expense for each of the five succeeding fiscal years and thereafter are as follows:

Six months period ending December 31, 2023 $ 244
2024 482
2025 479
2026 477
2027 471
2028 382
Thereafter 808
Total $ 3,343


Three months period ending December 31, 2023	$	121
2024	481
2025	477
2026	476
2027	469
2028	381
Thereafter	805
Total	$	3,210

~~Table of Contents~~

~~MICROVAST HOLDINGS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2023~~

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

NOTE 6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES


		December 31, 2022		June 30, 2023			December 31, 2022		September 30, 2023
Product warranty, current	Product warranty, current	$	13,044	$	7,855	Product warranty, current	$	13,044	$	15,176
Payables for purchase of property, plant and equipment	Payables for purchase of property, plant and equipment	29,183		82,968		Payables for purchase of property, plant and equipment	29,183		75,781
Other current liabilities	Other current liabilities	8,608		9,091		Other current liabilities	8,608		13,934
Accrued payroll and welfare	Accrued payroll and welfare	4,716		4,274		Accrued payroll and welfare	4,716		4,315
Accrued expenses	Accrued expenses	2,641		3,057		Accrued expenses	2,641		2,363
Interest payable	Interest payable	298		755		Interest payable	298		1,129
Other tax payable	Other tax payable	6,296		5,503		Other tax payable	6,296		6,703
Operating lease liabilities, current	Operating lease liabilities, current	1,934		2,946		Operating lease liabilities, current	1,934		2,415
Total	Total	$	66,720	$	116,449	Total	$	66,720	$	121,816

Table of Contents

MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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

NOTE 7. PRODUCT WARRANTY

Movement of product warranty was as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2023		2022		2023			2022		2023		2022		2023
Balance at beginning of the period	Balance at beginning of the period	$	51,431	$	39,610	$	58,458	$	42,060	Balance at beginning of the period	$	43,703	$	37,108	$	58,458	$	42,060
Provided during the period	Provided during the period	3,550		2,920		6,235		5,450		Provided during the period	2,028		3,567		8,263		9,017
Utilized during the period	Utilized during the period	(8,590)		(3,338)		(18,600)		(8,510)		Utilized during the period	(4,357)		(7,125)		(22,957)		(15,635)
Exchange difference	Exchange difference	(2,688)		(2,084)		(2,390)		(1,892)		Exchange difference	(2,467)		(202)		(4,857)		(2,094)
Balance at end of the period	Balance at end of the period	$	43,703	$	37,108	$	43,703	$	37,108	Balance at end of the period	$	38,907	$	33,348	$	38,907	$	33,348


		December 31, 2022		June 30, 2023			December 31, 2022		September 30, 2023
Product warranty – current	Product warranty – current	$	13,044	$	7,855	Product warranty – current	$	13,044	$	15,176
Product warranty – non-current	Product warranty – non-current	29,016		29,253		Product warranty – non-current	29,016		18,172
Total	Total	$	42,060	$	37,108	Total	$	42,060	$	33,348

NOTE 8. BANK BORROWINGS

On September 27, 2022, the Group entered into a ~~$111 million~~$111,483 (RMB800 million) loan facilities agreement with a group of lenders led by a PRC Bank (the "2022 Facility Agreement"). The 2022 Facility Agreement ~~has~~had an effective drawdown period until June 9, 2023, which was extended to June 9, 2024 by a supplemental agreement signed in October 2023. Under the supplemental agreement,the Company is currently in negotiations with the lead bank to extend to a later date. The banks are currently going through their internal approval process and although steady progress is being made there is no assurance that the banks will agree to the Company’s request. Should the banks not reach agreement then the Company would losehas access to ~~the~~RMB500 million undrawn amount ~~of $70,111 (RMB500 million). This would have no impact on~~under the ~~amount already drawn of $41,372 (RMB300 million) which would continue to be repaid in accordance with the scheduled repayment dates.~~2022 Facility Agreement. The interest rate is prime plus 115 basis points where prime is based on Loan Prime Rate published by the National Inter-bank Funding Center of the ~~PRC. The interest~~PRC and is payable on a quarterly ~~basis and the Company is current with all payments.~~basis. The loan facilities can only be used for the manufacturing capacity expansion at the Group’s facility located in Huzhou, China. The 2022 Facility Agreement contains certain customary restrictive covenants, including but not limited to disposal of assets and dividend distribution without the consent of the lender, and certain customary events of default.

As of September 30, 2023, the Group had outstanding borrowings of $38,703 under the 2022 Facility Agreement.


Repayment Date						Repayment Amount
December 10, 2023						$2,723 (RMB19.9 million)
June 10, 2024						$5,140 (RMB37.5 million)
December 10, 2024						$5,140 (RMB37.5 million)
June 10, 2025						$5,140 (RMB37.5 million)
December 10, 2025						$5,140 (RMB37.5 million)
June 10, 2026						$7,710 (RMB56.3 million)
December 10, 2026						$7,710 (RMB56.3 million)

The amount of capitalized interest expenses, which was recorded in construction in progress and property, plant and equipment, was $0 and $475 for the three months ended September 30, 2022 and 2023, respectively, and $0 and $1,503 for the nine months ended September 30, 2022 and 2023, respectively.

1415

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 8. BANK BORROWINGS-continued

~~As of June 30, 2023, the Group had outstanding borrowings of $38,941 under the 2022 Facility Agreement.~~


~~Repayment Date~~						~~Repayment Amount~~
~~December 10, 2023~~						~~$2,741 (RMB19.9 million)~~
~~June 10, 2024~~						~~$5,171 (RMB37.5 million)~~
~~December 10, 2024~~						~~$5,171 (RMB37.5 million)~~
~~June 10, 2025~~						~~$5,171 (RMB37.5 million)~~
~~December 10, 2025~~						~~$5,171 (RMB37.5 million)~~
~~June 10, 2026~~						~~$7,758 (RMB56.3 million)~~
~~December 10, 2026~~						~~$7,758 (RMB56.3 million)~~

The amount of capitalized interest expenses, which was recorded in construction in progress and property, plant and equipment, was $0 and $504 for the three months ended June 30, 2022 and 2023, respectively, and $0 and $1,028 for the six months ended June 30, 2022 and 2023, respectively.

The Group has also entered into short-term loan agreements and bank facilities with certain Chinese banks. The original terms of these loans are with a maximum maturity of 12 months and the interest rates range from ~~3.65%~~3.40% to ~~4.75%~~4.55% per annum.

Changes in bank borrowings are as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2023		2022		2023			2022		2023		2022		2023
Beginning balance	Beginning balance	$	13,335	$	50,964	$	13,301	$	46,395	Beginning balance	$	8,807	$	49,146	$	13,301	$	46,395
Proceeds from bank borrowings	Proceeds from bank borrowings	13,466		4,848		13,466		9,232		Proceeds from bank borrowings	45,242		9,207		58,708		18,439
Repayments of principal	Repayments of principal	(17,332)		(3,939)		(17,332)		(3,939)		Repayments of principal	(7,150)		(2,347)		(24,482)		(6,286)
Exchange difference	Exchange difference	(662)		(2,727)		(628)		(2,542)		Exchange difference	(1,914)		(349)		(2,542)		(2,891)
Ending balance	Ending balance	$	8,807	$	49,146	$	8,807	$	49,146	Ending balance	$	44,985	$	55,657	$	44,985	$	55,657


Balance of bank borrowings includes:	Balance of bank borrowings includes:	December 31, 2022		June 30, 2023		Balance of bank borrowings includes:	December 31, 2022		September 30, 2023
Current	Current	$	17,398	$	18,117	Current	$	17,398	$	24,818
Non-current	Non-current	28,997		31,029		Non-current	28,997		30,839
Total	Total	$	46,395	$	49,146	Total	$	46,395	$	55,657

Certain assets of the Group have been pledged to secure the above bank facilities granted to the Group. The aggregate carrying amount of the assets pledged by the Group as of December 31, 2022 and ~~June~~September 30, 2023 are as follows:

December 31,
2022 June 30,
2023
Buildings $ 27,245 $ 25,088
Land use rights 12,639 11,878
Total $ 39,884 $ 36,966


	December 31, 2022		September 30, 2023
Buildings	$	27,245	$	24,523
Land use rights	12,639		11,734
Total	$	39,884	$	36,257

~~Table of Contents~~

~~MICROVAST HOLDINGS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2023~~

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

NOTE 9. OTHER NON-CURRENT LIABILITIES


		December 31, 2022		June 30, 2023			December 31, 2022		September 30, 2023
Product warranty - non-current	Product warranty - non-current	$	29,016	$	29,253	Product warranty - non-current	$	29,016	$	18,172
Deferred subsidy income- non-current	Deferred subsidy income- non-current	3,066		2,793		Deferred subsidy income- non-current	3,066		2,645
Total	Total	$	32,082	$	32,046	Total	$	32,082	$	20,817

Table of Contents

MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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

NOTE 10. BONDS PAYABLE


		December 31, 2022		June 30, 2023			December 31, 2022		September 30, 2023
Long–term bonds payable	Long–term bonds payable					Long–term bonds payable
Huzhou Saiyuan	Huzhou Saiyuan	$	43,888	$	43,888	Huzhou Saiyuan	$	43,888	$	43,888
Total	Total	$	43,888	$	43,888	Total	$	43,888	$	43,888

On December 29, 2018, Microvast Power Systems Co., Ltd.('MPS'), one of the Company's subsidiaries, signed an agreement with Huzhou Saiyuan, an entity established by the local government, to issue convertible bonds to Huzhou Saiyuan for a total consideration of $87,776 (RMB600 million). The Company pledged its 12.39% equity holding over MPS to Huzhou Saiyuan to facilitate the issuance of these convertible bonds.

If the subscribed bonds are not repaid by the maturity date, Huzhou Saiyuan has the right to dispose of the equity interests pledged by the Company in proportion to the amount of matured bonds, or convert the bonds into equity interests of MPS within 60 days after the maturity date. If Huzhou Saiyuan decides to convert the bonds into equity interests of MPS, the equity interests pledged would be released and the convertible bonds would be converted into equity interest of MPS based on an entity value of MPS of $950,000.

In September 2020 and 2022, MPS entered into two supplement agreements with Huzhou Saiyuan, respectively, to change the repayment schedule as follows: (i) $14,629 (RMB100 million) was repaid, together with interest accrued, on or before November 10, 2022, (ii) $14,630 (RMB100 million) was repaid, together with interest accrued, on or before December 31, 2022, and (iii) the remaining $43,888 (RMB300 million) will be repaid, together with interest accrued, on or before January 31, 2027. 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 complied in full with the amended repayment schedule and accordingly, as of ~~June~~September 30, 2023, the subscription and outstanding balance of the convertible bonds was $43,888 (RMB300 million).

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2022

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

NOTE 11. WARRANTS

The Company assumed 27,600,000 publicly-traded warrants (“Public Warrants”) and 837,000 private placement warrants issued to Tuscan Holdings Acquisition LLC (the “Sponsor”) and EarlyBirdCapital, Inc. (“EarlyBirdCapital”) (“Private Warrants” and together with the Public Warrants, the “Warrants”) upon the Business Combination, all of which were issued in connection with Tuscan’s initial public offering (other than 150,000 Private Warrants that were issued in connection with the closing of the Business Combination) and entitle the holder to purchase one share of the Company’s Common Stock at an exercise price of $11.50 per share. During the three and ~~six~~nine months ended ~~June~~September 30, 2023, none of the Public Warrants or the Private Warrants were exercised.

The Public Warrants became exercisable 30 days after the completion of the Business Combination. The Public Warrants are only exercisable for cash, however, if the Company were to not maintain the effectiveness of the registration statement covering the shares of Common Stock issuable upon exercise of the Public Warrants, the Public Warrants would be exercisable on a net-share settlement basis. The Public Warrants will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation.

The Company may redeem the Public Warrants:

•in whole and not in part;

•at a price of $0.01 per warrant;

•upon not less than 30 days’ prior written notice of redemption;

•if, and only if, the reported last sale price of the Company’s Common Stock equals or exceeds $18.00 per share for any 20-trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to the warrant holders; and

•if, and only if, there is a current registration statement in effect with respect to the shares of Common Stock underlying the warrants.

The Company classified the Public Warrants as equity. If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a net-share settlement basis.

The Private Warrants are identical to the Public Warrants, except that the Private Warrants will be exercisable for cash or on a net-share settlement basis, at the holder’s option, and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. In addition, so long as the Private Warrants are held by EarlyBirdCapital and its designee, the Private Warrants will expire five years from the effective date of the Business Combination.

The exercise price and number of shares of Common Stock issuable upon exercise of the Warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the Warrants will not be adjusted for issuance of Common Stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Warrants.

The private warrant liability was remeasured at fair value as of ~~June~~September 30, 2023, resulting in a ~~gain~~loss of $0$42 and ~~$17~~$25 for the three and ~~six~~nine months ended ~~June~~September 30, 2023, classified within changes in fair value of warrant liability in the unaudited condensed consolidated statements of operations, respectively.

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 11. WARRANTS - continued

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:


	~~June~~September 30, 2023
Market price of public stock	$	~~1.60~~1.89
Exercise price	$	11.50
Expected term (years)	~~3.07~~2.82
Volatility	~~70.89~~72.71		%
Risk-free interest rate	~~4.35~~4.71		%
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 exercise price is extracted from the warrant agreements. The expected term is derived from the exercisable years based on the warrant agreements. The expected volatility is a blend of implied volatility from the Company’s own public warrant pricing, ~~and~~ the average volatility of peer ~~companies.~~companies and the Company's historical volatility. 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.

NOTE 12. FAIR VALUE MEASUREMENT

Measured or disclosed at fair value on a recurring basis

The Group measured its financial assets and liabilities, including cash and cash equivalents, restricted cash and warrant liability at fair value on a recurring basis as of December 31, 2022 and ~~June~~September 30, 2023. 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. In determining the fair value of the warrant liability, the Company used the Monte Carlo Model that assumes optimal exercise of the Company’s redemption option at the earliest possible date. See Note 11 – Warrants.

As of December 31, 2022 and ~~June~~September 30, 2023, information about inputs for the fair value measurements of the Group’s assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows:


	Fair Value Measurement as of December 31, 2022
(In thousands)	Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Cash and cash equivalents	$	231,420	—	—	$	231,420
Restricted cash	71,197		—	—	71,197
Total financial asset	$	302,617	—	—	$	302,617
Warrant liability	$	—	—	126	$	126
Total financial liability	$	—	—	126	$	126

1819

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 12. FAIR VALUE MEASUREMENT - continued

Measured or disclosed at fair value on a recurring basis-continued


		Fair Value Measurement as of June 30, 2023							Fair Value Measurement as of September 30, 2023
(In thousands)	(In thousands)	Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total		(In thousands)	Quoted Prices in Active Market for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total
Cash and cash equivalents	Cash and cash equivalents	$	142,766	—	—	$	142,766	Cash and cash equivalents	$	67,398	—	—	$	67,398
Restricted cash	Restricted cash	$	27,553	—	—	$	27,553	Restricted cash	$	21,814	—	—	$	21,814
Total financial asset	Total financial asset	$	170,319	—	—	$	170,319	Total financial asset	$	89,212	—	—	$	89,212
Warrant liability	Warrant liability	$	—	—	109	$	109	Warrant liability	$	—	—	151	$	151
Total financial liability	Total financial liability	$	—	—	109	$	109	Total financial liability	$	—	—	151	$	151

The following is a reconciliation of the beginning and ending balances for Level 3 warrant liability during the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023:


(In thousands)	(In thousands)	Six Months Ended June 30,				(In thousands)	Nine Months Ended September 30,
		2022		2023			2022		2023
Balance at the beginning of the period	Balance at the beginning of the period	1,105		$	126	Balance at the beginning of the period	1,105		$	126
Changes in fair value	Changes in fair value	(820)		(17)		Changes in fair value	(921)		25
Balance at end of the period	Balance at end of the period	$	285	$	109	Balance at end of the period	$	184	$	151

Measured or disclosed at fair value on a nonrecurring basis

The Group measured the long-lived assets using the income approach—discounted cash flow method, when events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable.

1920

Table of Contents

MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 13. LEASES

The Group has operating leases for office spaces and warehouses. Certain leases include renewal options and/or termination options, which are factored into the Group's determination of lease payments when appropriate.

Operating lease cost for the three and ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$1,069~~$861 and ~~$1,949,~~$2,810, which excluded cost of short-term contracts. Short-term lease cost for the three and ~~six~~nine months ended ~~June~~September 30, 2023 was ~~$108~~$90 and ~~$179.~~$269.

As of ~~June~~September 30, 2023, the weighted average remaining lease term was ~~10.3~~10.2 years and weighted average discount rate was ~~5.0%~~5.2% for the Group's operating leases.

Supplemental cash flow information of the leases were as follows:


	~~Six~~Nine months ended ~~June~~September 30, 2023
Cash payments for operating leases	$	~~1,958~~2,822
Right-of-use assets obtained in exchange for new operating lease liabilities	$	~~5,850~~5,726

The following is a maturity analysis of the annual undiscounted cash flows for lease liabilities as of ~~June~~September 30, 2023:


		As of June 30, 2023			As of September 30, 2023
Six months period ending December 31, 2023		$	2,092
Three months period ending December 31, 2023				Three months period ending December 31, 2023	$	828
2024	2024	$	3,280	2024	$	3,220
2025	2025	$	2,798	2025	$	2,744
2026	2026	$	2,546	2026	$	2,495
2027	2027	$	2,416	2027	$	2,365
2028	2028	$	1,839	2028	$	1,788
Thereafter	Thereafter	$	11,666	Thereafter	$	11,308
Total future lease payments	Total future lease payments	$	26,637	Total future lease payments	$	24,748
Less: Imputed interest	Less: Imputed interest	$	(5,688)	Less: Imputed interest	$	(5,382)
Present value of operating lease liabilities	Present value of operating lease liabilities	$	20,949	Present value of operating lease liabilities	$	19,366

NOTE 14. SHARE-BASED PAYMENT

On July 21, 2021, the Company adopted the Microvast Holdings, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), effective upon the Closing Date. The 2021 Plan provides for the grant of incentive and non-qualified stock option, restricted stock units, restricted share awards, stock appreciation awards, and cash-based awards to employees, directors, and consultants of the Company. Options awarded under the 2021 Plan expire no more than 10 years from the date of grant. Concurrently with the closing of the Business Combination, the share awards granted under 2012 Share Incentive Plan of Microvast, Inc. (the ~~"2012 Plan"~~“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. 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.

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 14. SHARE-BASED PAYMENT - continued

Stock options

The grant and modification date fair value of the stock options was determined using the Black Scholes model with the following assumptions:


	~~Six months ended June 30, 2023~~
~~Exercise price~~	$	~~1.21~~
~~Expected terms (years)~~	~~6.00~~
~~Volatility~~	~~55.59~~		%
~~Risk-free interest rate~~	~~3.48~~		%
~~Expected dividend yields~~	~~0.00~~		%
~~Fair value of options granted~~	$	~~0.67~~


	Nine months ended September 30, 2023
Exercise price	$	1.21		~	$	6.28
Expected terms (years)	0.25			~	6.00
Volatility	55.59		%	~	86.83		%
Risk-free interest rate	3.48		%	~	5.38		%
Expected dividend yields	0.00%
Fair value of options granted	$	0.005		~	$	1.48

The exercise prices for each award were extracted from the option agreements. The expected terms for each award were derived using the simplified method, and is estimated to occur at the midpoint of the vesting date and the expiration date. The volatility of the underlying common stock during the lives of the options was ~~estimated based on~~a blend of implied volatility from the ~~historical stock price~~average volatility of ~~comparable listed~~peer companies, ~~over a period comparable to~~implied volatility and the ~~expected term of the options.~~Company's historical volatility. Risk-free interest rate was estimated based on the market yield of US Government Bonds with maturity close to the expected term of the options. The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the options.

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 14. SHARE-BASED PAYMENT - continued

Stock options-continued

Stock options activity for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023 was as follows:


Stock options life	Stock options life	Number of Shares	Weighted Average Exercise Price (US$)	Weighted Average Grant Date Fair Value (US$)	Weighted Average Remaining Contractual Life	Stock options life	Number of Shares	Weighted Average Exercise Price (US$)	Weighted Average Grant Date Fair Value (US$)	Weighted Average Remaining Contractual Life
Outstanding as of December 31, 2021	Outstanding as of December 31, 2021	33,503,657	6.19	4.95	7.9	Outstanding as of December 31, 2021	33,503,657	6.19	4.95	7.9
Grant	Grant	2,400,000	5.31	2.97		Grant	2,900,000	4.81	2.69
Forfeited	Forfeited	(120,225)	6.28	4.92		Forfeited	(227,092)	6.28	4.86
Outstanding as of June 30, 2022		35,783,432	6.13	4.84	7.3
Expected to vest and exercisable as of June 30, 2022		35,783,432	6.13	4.84	7.3
Exercisable as of June 30, 2022		1,122,100	6.28	5.29	8.1
Outstanding as of September 30, 2022						Outstanding as of September 30, 2022	36,176,565	6.08	4.80	7.1
Expected to vest and exercisable as of September 30, 2022						Expected to vest and exercisable as of September 30, 2022	36,176,565	6.08	4.80	7.1
Exercisable as of September 30, 2022						Exercisable as of September 30, 2022	11,875,830	6.20	5.00	7.2
Outstanding as of December 31, 2022	Outstanding as of December 31, 2022	36,091,071	6.08	4.80	6.8	Outstanding as of December 31, 2022	36,091,071	6.08	4.80	6.8
Grant	Grant	240,000	1.25	0.67		Grant	640,000	1.77	1.18
Forfeited	Forfeited	(347,317)	6.28	4.86		Forfeited	(895,706)	5.02	3.64
Outstanding as of June 30, 2023		35,983,754	6.04	4.77	6.3
Expected to vest and exercisable as of June 30, 2023		35,983,754	6.04	4.77	6.3
Exercisable as of June 30, 2023		12,563,621	6.14	4.87	6.3
Outstanding as of September 30, 2023						Outstanding as of September 30, 2023	35,835,365	6.03	4.76	5.6
Expected to vest and exercisable as of September 30, 2023						Expected to vest and exercisable as of September 30, 2023	35,835,365	6.03	4.76	5.6
Exercisable as of September 30, 2023						Exercisable as of September 30, 2023	23,916,879	6.14	4.90	5.5

During the three months ended ~~June~~September 30, 2022 and 2023, the Company recorded share-based compensation expense of ~~$18,332~~$14,081 and ~~$13,396~~$12,713 related to the option awards, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023, the Company recorded share-based compensation expense of ~~$31,962~~$46,043 and ~~$27,055~~$39,768 related to the option awards, respectively.

The total unrecognized equity-based compensation costs as of ~~June~~September 30, 2023 related to the stock options was ~~$60,805,~~$43,349, which is expected to be recognized over a weighted-average period of ~~1.1~~0.9 years. The aggregate intrinsic value of the stock options as of ~~June~~September 30, 2023 was ~~$85.~~$59.

Capped Non-vested share units

The capped non-vested share units ~~("CRSUs"~~(“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.

On June 27, 2022, the Board of Directors and Compensation Committee approved a modification of the settlement terms of 20,023,699 CRSUs under the 2021 Plan from cash settlement to share settlement (the “Modification”). Pursuant to the Modification, on each vesting date, if the stock price is higher than the capped price, the number of shares to be issued will be calculated based on the following formula:

Number of shares to be issued = Capped price* Number of shares vested /Vesting date stock price

Table of Contents

MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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

NOTE 14. SHARE-BASED PAYMENT - continued

Capped Non-vested share units-continued

If the stock price is equal to or less than the capped price, the Company will grant a fixed number of shares on each vesting date based on the vesting schedule. All other terms of the CRSUs remain unchanged. The Modification resulted in a change of the CRSUs’ classification from liability to equity, as the predominant feature of the modified CRSUs was the granting of a fixed number of shares on each vesting date instead of a fixed monetary amount. The determination of the predominant feature was based on the estimated probability of how the awards will be settled using the Monte Carlo model.

~~Table of Contents~~

~~MICROVAST HOLDINGS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2023~~

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

~~NOTE 14. SHARE-BASED PAYMENT - continued~~

~~Capped Non-vested share units-continued~~

At the Modification date, the Company reclassified the amounts previously recorded as a share-based compensation liability to additional paid-in capital. The modified CRSUs were accounted for as an equity award going forward from the date of the Modification with compensation expenses recognized for each tranche at the fair value measured on the modification date.

At the 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 Modification date to the vesting date based on the terms of the applicable award agreements. The volatility of the underlying common stock was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the expected term of the awards. Risk-free interest rate was estimated based on the market yield of US Government Bonds with maturity close to the expected term of the awards. The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the awards.

During the three months ended ~~June~~September 30, 2022 and 2023, the Company recorded share-based compensation expense of ~~$11,154~~$4,367 and ~~$3,302,~~$1,832, related to these CRSUs awards, respectively. During the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023, the Company recorded share-based compensation expense of ~~$25,113~~$29,481 and ~~$6,546,~~$8,378, related to these CRSUs awards, respectively.

Activity on the CRSUs for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023 was as follows:


		Number on Non-Vested Shares	Weighted Average Grant Date Fair Value per Share (US$)			Number on Non-Vested Shares	Weighted Average Grant Date Fair Value per Share (US$)
Outstanding as of December 31, 2021	Outstanding as of December 31, 2021	23,027,399	8.74	1	Outstanding as of December 31, 2021	23,027,399	8.74	1
Vested	Vested	(2,860,713)	8.74		Vested	(9,582,930)	4.37
Outstanding as of June 30, 2022		20,166,686	2.47
Outstanding as of September 30, 2022					Outstanding as of September 30, 2022	13,444,469	2.38
Outstanding as of December 31, 2022	Outstanding as of December 31, 2022	13,444,469	2.38		Outstanding as of December 31, 2022	13,444,469	2.38
Outstanding as of June 30, 2023		13,444,469	2.38
Vested					Vested	(6,722,228)	2.47
Outstanding as of September 30, 2023					Outstanding as of September 30, 2023	6,722,241	2.29

The total unrecognized equity-based compensation costs as of ~~June~~September 30, 2023 related to the CRSUs was ~~$5,903.~~$4,132.

1 The amount represents the Modification date value per share as of July 25, 2021. As of the Modification date, the settled price was the capped price as described above.

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 14. SHARE-BASED PAYMENT - continued

Restricted Stock Units

Following the Business Combination, the Company granted ~~2,187,777~~2,641,715 restricted stock units (“RSUs”) and 2,680,372 performance-based restricted stock unit (“PSU”) awards subject to service, performance and/or market conditions. The service condition requires the participant’s continued services or employment with the Company through the applicable vesting date, and the performance condition requires the achievement of the performance criteria defined in the award agreement. The market condition is based on the Company’s TSR relative to a comparator group during a specified performance period.

The fair value of RSUs is determined by the market closing price of Common Stock at the grant date and is amortized over the vesting period on a straight-line basis. The fair value of PSUs that include vesting based on market conditions are estimated using the Monte Carlo valuation method. For PSU awards with performance conditions, share-based compensation expense is only recognized if the performance conditions become probable to be satisfied. Compensation cost for these awards is amortized on a straight-line basis over the vesting period based on the grant date fair value, regardless of whether the market condition is satisfied. Accordingly, the Company recorded share-based compensation expense of ~~$512~~$577 and ~~$959~~$1,536 related to these RSUs and ~~$789~~$880 and ~~$1,508~~$2,388 related to these PSUs during the three and ~~six~~nine months ended ~~June~~September 30, 2023, respectively. During the three and ~~six~~nine months ended ~~June~~September 30, 2022, the Company recorded share-based compensation expense of ~~$360~~$345 and ~~$704~~$1,048 related to these RSUs and ~~$673~~$621 and ~~$1,032~~$1,653 related to these PSUs, respectively.

The following assumptions were used for the respective period to calculate the fair value of common stock to be issued under TSR awards on the date of grant using the Monte Carlo model:


	~~Six~~Nine months ended ~~June~~September 30, 2023
Expected term (years)	2.92
Volatility	61.89	%
Risk-free interest rate	3.83	%
Expected dividend yields	0.00	%

The expected term was derived based on the remaining time from the grant date through the end of the performance period. The volatility of the underlying common stock during the lives of the awards was estimated based on the historical stock price volatility of comparable listed companies over a period comparable to the expected term of the awards. Risk-free interest rate was estimated based on the market yield of US Government Bond with maturity close to the expected term of the awards. The dividend yield was estimated by the Company based on its expected dividend policy over the expected term of the awards.

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 14. SHARE-BASED PAYMENT - continued

Restricted Stock Units-continued

The non-vested shares activity for the ~~six~~nine months ended ~~June~~September 30, 2022 and 2023 was as follows:


		Number of Non-Vested Shares	Weighted Average Grant Date Fair Value Per Share (US$)		Number of Non-Vested Shares	Weighted Average Grant Date Fair Value Per Share (US$)
Outstanding as of December 31, 2021	Outstanding as of December 31, 2021	671,441	9.08	Outstanding as of December 31, 2021	671,441	9.08
Grant	Grant	983,999	5.64	Grant	1,239,854	4.93
Vested	Vested	(16,250)	8.52	Vested	(86,996)	6.96
Forfeited	Forfeited	(26,802)	8.26	Forfeited	(58,126)	7.47
Outstanding as of June 30, 2022		1,612,388	7.00
Outstanding as of September 30, 2022				Outstanding as of September 30, 2022	1,766,173	6.33
Outstanding as of December 31, 2022	Outstanding as of December 31, 2022	1,222,837	6.92	Outstanding as of December 31, 2022	1,222,837	6.92
Grant	Grant	2,900,695	1.86	Grant	3,354,633	1.88
Vested	Vested	(310,432)	3.85	Vested	(496,586)	3.39
Forfeited	Forfeited	(51,036)	4.21	Forfeited	(103,424)	4.59
Outstanding as of June 30, 2023		3,762,064	3.31
Outstanding as of September 30, 2023				Outstanding as of September 30, 2023	3,977,460	3.17

The total unrecognized equity-based compensation costs as of ~~June~~September 30, 2023 related to the non-vested shares was ~~$7,827.~~$7,039.

The following summarizes the classification of share-based compensation:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2022		2023		2022		2023			2022		2023		2022		2023
Cost of revenues	Cost of revenues	$	1,882	$	1,525	$	3,816	$	3,029	Cost of revenues	$	1,964	$	1,530	$	5,780	$	4,559
General and administrative expenses	General and administrative expenses	24,558		12,419		42,694		24,587		General and administrative expenses	12,834		10,444		55,528		35,031
Research and development expenses	Research and development expenses	2,649		2,693		7,788		5,707		Research and development expenses	3,193		2,953		10,981		8,660
Selling and marketing expenses	Selling and marketing expenses	1,328		1,213		4,249		2,456		Selling and marketing expenses	1,284		935		5,533		3,391
Construction in process	Construction in process	102		149		264		289		Construction in process	139		140		403		429
Total	Total	$	30,519	$	17,999	$	58,811	$	36,068	Total	$	19,414	$	16,002	$	78,225	$	52,070

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2023

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

NOTE 15. NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share for the periods indicated:

Three Months Ended June 30, Six Months Ended
June 30,
2022 2023 2022 2023
Numerator:
Net loss attributable to common stock shareholders $ (44,182) $ (26,089) $ (87,958) $ (55,670)
Denominator:
Weighted average common stock used in computing basic and diluted net loss per share 300,565,515 307,742,032 299,709,069 307,728,460
Basic and diluted net loss per share $ (0.15) $ (0.08) $ (0.29) $ (0.18)

~~Table of Contents~~

~~MICROVAST HOLDINGS, INC.~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~JUNE 30, 2023~~

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

~~NOTE 15. NET LOSS PER SHARE - continued~~


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2023		2022		2023
Numerator:
Net loss attributable to common stock shareholders	$	(36,544)	$	(26,130)	$	(124,502)	$	(81,800)
Denominator:
Weighted average common stock used in computing basic and diluted net loss per share	305,977,372		313,108,457		301,821,464		309,541,499
Basic and diluted net loss per share	$	(0.12)	$	(0.08)	$	(0.41)	$	(0.26)

For the three and ~~six~~nine months ended ~~June~~September 30, 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 periods prescribed.


		Three Months Ended June 30,		Six Months Ended June 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2022	2023	2022	2023		2022	2023	2022	2023
Shares issuable upon exercise of stock options	Shares issuable upon exercise of stock options	34,145,152	36,123,034	33,815,815	36,088,798	Shares issuable upon exercise of stock options	27,032,668	35,830,564	31,529,919	36,001,774
Shares issuable upon vesting of non-vested shares	Shares issuable upon vesting of non-vested shares	1,347,060	3,979,361	1,011,788	3,527,440	Shares issuable upon vesting of non-vested shares	1,815,043	3,898,963	1,282,482	3,652,642
Shares issuable upon vesting of Capped non-vested shares	Shares issuable upon vesting of Capped non-vested shares	660,122	13,349,144	331,885	13,349,144	Shares issuable upon vesting of Capped non-vested shares	15,017,783	8,343,220	5,280,978	11,662,166
Shares issuable upon exercise of warrants	Shares issuable upon exercise of warrants	28,437,000	28,437,000	28,437,000	28,437,000	Shares issuable upon exercise of warrants	28,437,000	28,437,000	28,437,000	28,437,000
Shares issuable upon vesting of Earn-out shares	Shares issuable upon vesting of Earn-out shares	19,999,988	19,999,988	19,999,988	19,999,988	Shares issuable upon vesting of Earn-out shares	19,999,988	19,999,988	19,999,988	19,999,988
Shares issuable that may be subject to cancellation	Shares issuable that may be subject to cancellation	1,687,500	1,687,500	1,687,500	1,687,500	Shares issuable that may be subject to cancellation	1,687,500	1,687,500	1,687,500	1,687,500

NOTE 16. COMMITMENTS AND CONTINGENCIES

Litigation

The directors of Company predecessor, Tuscan, have been named as defendants in a litigation filed in the Delaware Court of Chancery captioned Matt Jacob v. Stephen A. Vogel, et al., No. 2022-0600-PAF (Del. Ch.) (filed July 7, 2022). The plaintiff is seeking to certify the litigation as a stockholder class action. The complaint alleges that defendants breached their fiduciary duties in connection with Tuscan’s acquisition of Microvast, Inc., including by making inadequate disclosures concerning the projected earnings of Microvast, Inc. The plaintiff further alleges that once the earnings of the combined company became public, the Company’s stock dropped, causing losses to investors.

Pursuant to the Company's governing documents and indemnification agreements entered into by the Company with each of the named defendants, the Company has indemnified the defendants for all expenses and losses related to the litigation subject to the terms of those indemnification agreements. While the lawsuit is being vigorously defended, other reported lawsuits of this type have resulted in a broad range of outcomes, with each case being dependent on its own unique set of facts and circumstances. Litigation of this kind can lead to settlement negotiations, including negotiations prompted by pre-trial civil court procedures. The outcome of any litigation is inherently uncertain, and there is always the possibility that a court rules in a manner that is adverse to the interests of the Company and the individual defendants. However, the amount of any such loss in that scenario, which could be material, cannot be reasonably estimated at this time.

The Group is also involved in other litigation, claims, and proceedings. The Group evaluates the status of each legal matter and assesses the potential financial exposure. If the potential loss from any legal proceedings or litigation is considered probable and the amount can be reasonably estimated, the Group accrues a liability for the estimated loss. Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimated. As of December 31, 2022 and June 30, 2023, based on the information currently available, the Group believes that the loss contingencies that may arise as a result of currently pending ordinary course legal proceedings are not reasonably likely to have a material adverse effect on the Group’s business, results of operations, financial condition, and cash flows.

~~Capital commitments~~

Capital commitments for construction of property and purchase of property, plant and equipment were $135,535 as of June 30, 2023, which is mainly for the construction of lithium battery production lines.

~~Purchase Commitments~~

~~Purchase commitments for non-cancelable contractual obligations primarily related to purchases of inventory were $58,790 as of June 30, 2023.~~

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MICROVAST HOLDINGS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE~~SEPTEMBER 30, 2023

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

NOTE 16. COMMITMENTS AND CONTINGENCIES - continued

Litigation - continued

The Group is also involved in other litigation, claims, and proceedings. The Group evaluates the status of each legal matter and assesses the potential financial exposure. If the potential loss from any legal proceedings or litigation is considered probable and the amount can be reasonably estimated, the Group accrues a liability for the estimated loss. Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimated. As of December 31, 2022 and September 30, 2023, based on the information currently available, the Group believes that the loss contingencies that may arise as a result of currently pending ordinary course legal proceedings are not reasonably likely to have a material adverse effect on the Group’s business, results of operations, financial condition, and cash flows.

Capital commitments

Capital commitments for construction of property and purchase of property, plant and equipment were $95,905 as of September 30, 2023, which is mainly for the construction of lithium battery production lines.

Purchase Commitments

Purchase commitments for non-cancelable contractual obligations primarily related to purchases of inventory were $65,691 as of September 30, 2023.

Letters of credit

The Company may be required to provide a letter of credit to customers upon contract signing. The letter of credit generally has an expiration date within one year. As of ~~June~~September 30, 2023, the Company ~~obtained a~~had an outstanding standby letter of credit from a bank with ~~$25,490~~$25,496 of short-term investment as collateral.

Pledged assets

The Group may pledge certain assets to banks to secure the issuance of bank acceptance notes for the Group. As of ~~June~~September 30, 2023, notes receivable from customers in the amount of ~~$15,859,~~$13,061, together with certain of our machinery and equipment with a carrying value of ~~$29,562~~$28,453 has been pledged to secure the issuance of such notes.

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

References in this Report to the “Company,” “Microvast Holdings, Inc.,” “Microvast,” “our,” “us” or “we” refer to Microvast Holdings, Inc. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Business

Microvast Holdings, Inc. is an advanced battery technology company headquartered in Stafford, Texas, and is publicly traded on the Nasdaq stock exchange (the “NASDAQ”). We design, develop and manufacture battery components and systems primarily for electric commercial vehicles and utility-scale energy storage systems (“ESS”).

When we founded Microvast in 2006, our guiding principle, which remains at the heart of everything we do today, was to adopt an innovative and creative approach to the design of lithium-ion batteries without relying on past technologies. We call this true innovation. Our design approach began without preconceptions on how to make a lithium-ion battery, which contrasts to many other battery companies which took legacy battery technologies used in consumer electronics and adopted those for use in new market opportunities, such as electric vehicles, which we believe is product development, not innovation. To understand this difference, is to understand what we have set out to achieve.

Our mission is to use our innovative approach to create the battery technologies and solutions to accelerate the adoption of electric vehicles and the integration of renewable energy sources in order to power the transition to a sustainable economy. In particular, we seek to lead the charge in establishing and securing U.S. domestic battery production, which will strengthen the U.S. battery manufacturing base and reduce reliance on foreign battery manufacturing, in what is becoming a sector with significant strategic importance. We believe continuous investment in our technology and operations will deliver long-term targeted revenue and income growth.

We have developed proprietary technologies covering the entire battery system through our vertically integrated approach: from basic cell materials like the cathode, anode, electrolyte and separator, to cooling systems and software controls for the battery pack. 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.

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. This is a necessity because electric vehicles can only be considered as a green technology if the energy used to power them is also green. Addressing this symbiotic relationship is at the heart of our research activities and we expect it will shape our strategies for the foreseeable future.

Our most recent innovation is our high-energy, nickel, manganese, and cobalt (“NMC”) 53.5 ampere-hour battery cell (the “53.5Ah”), whose performance characteristics make it an attractive solution for commercial vehicle and ESS applications. To bring this product to market we have made significant investments in capacity expansions in Huzhou, China and Clarksville, Tennessee. Both facilities are using the same fully-automated production equipment for the 53.5Ah battery cell which will give us considerable operating efficiencies. We expect the 53.5Ah battery cell to be our dominant revenue driver for this next phase of our growth.

Since 2009, when we launched our first ultra-fast battery system, we have sold and delivered approximately ~~3,750.7~~4,069.9 megawatt hours (“MWh”) of battery systems. Our revenue for the period ended ~~June~~September 30, 2023, increased ~~$10.5~~$41.5 million to ~~$75.0~~$80.1 million, a ~~16%~~107% increase compared to the period ended ~~June~~September 30, 2022. As of ~~June~~September 30, 2023, we had an order backlog of approximately ~~$675.9~~$678.7 million for our battery systems (the equivalent of approximately ~~2,559.5~~2,526.1 MWh), over 90% of which is attributable to the U.S. and Europe. We expect to fulfill a majority of our backlog within 2023 and 2024.

On October 3, 2022, we launched our new energy division (“Microvast Energy”). The new division ~~will design, develop~~designs, develops and ~~manufacture~~manufactures ESS containers that are co-located with solar solutions or operate as stand-alone energy assets

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using our battery technology. The engineering, sales, after-sales and marketing and customer care departments for Microvast Energy are headquartered in northern Colorado.

On July 11, 2023, we announced that we are expanding our ESS business to a new facility in Windsor, Colorado.

This new facility provides nearly 100,000 square feet of space for assembling ESS containers, with ample room to add additional assembly capacity for our ESS business as needed and is expected to become operational in 2023.

In October 2022, we were notified by the U.S. Department of Energy (“DOE”) that we had been selected, in collaboration with General Motors, to receive $200 million in grant funding as part of the DOE's Battery Materials Processing and Battery Manufacturing initiative pursuant to the recently enacted infrastructure law, subject to negotiation of specific terms and conditions. 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. Notwithstanding the DOE’s decision, we plan to continue making significant investments in the United States, including completing our battery manufacturing facility in Clarksville, Tennessee. We also remain committed to building a polyaramid separator manufacturing plant in the United States but intend to focus on our core business in the near term.

Completion of the Business Combination

On July 23, 2021, Microvast Holdings, Inc. (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.

Key Factors Affecting Our Performance

We believe that our future success will be dependent on several factors, including the factors discussed below. 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 the 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 October 2021, as part of our efforts to develop innovative technology, 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. We also plan to continue leveraging our knowledge base in our overseas locations, including Europe and China and to continue expanding our R&D efforts on a global basis. We expect our results of operations will continue to be impacted by our ability to develop new products with improved performance and reduced ownership cost, as well as the cost of our R&D efforts.

Market Demand

Our revenue and profitability depend substantially on the demand for battery systems and battery components, which is driven by the growth of the commercial and passenger electric vehicle and energy storage markets. Many factors contribute to the development of the electric vehicle and battery energy storage sector, including product innovation, general economic and political conditions, environmental concerns, energy demand, government support and economic incentives(e.g., the IRA in the U.S. and the E.U. Green Deal, E.U. Fit for 55). 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.

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 ~~June~~September 30, 2023, we had a backlog of approximately ~~$675.9~~$678.7 million for our battery systems, equivalent to approximately ~~2,559.5~~2,526.1 MWh. So far, we have used ~~$332.4~~$392.4 million of the proceeds from the Business Combination that was completed in July 2021 to expand our manufacturing facilities and for the purchase of property and equipment associated with our existing manufacturing and R&D facilities. This investment program allows us

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to increase our manufacturing output, enabling us to address our backlog and to capture growing market opportunities. We expect the total capital expenditures related to these capacity expansions in Huzhou, China and Clarksville, Tennessee, which will give us an additional 4 GWh of capacity, to be in the range of $460.0 million to $490.0 million.

Future capacity expansions will be carried out in a measured manner based on our ongoing assessment of medium- and long-term demand for our solutions. Any such capacity expansions will require significant additional capital expenditures and will require corresponding expansion of our supporting infrastructure, further development of our sales and marketing team, expansion of our customer base and strengthened quality control.

Sales Geographic Mix

After initially being focused on the Asia & Pacific regions, we have expanded and continue to expand our presence and product promotion to Europe and the U.S. to capitalize on the rapidly growing electric vehicle and battery energy storage markets in those geographies. As we continue to expand our geographic focus to Europe and the U.S., we believe sales of our products in Europe and the U.S. will have the potential to generate higher gross margins because average sales prices for customers in the U.S. and Europe are typically significantly higher than the average sales prices in China. It has been our experience that buyers in Europe and the U.S. are more motivated by the technologies and quality of our products than are buyers in China, making them less sensitive to the price of our products than are similarly situated buyers in China where we are also faced with intense competition from local Chinese battery manufacturers, some of which have state support. Therefore, the geographic sources of our revenue will have an impact on our revenue and gross margins.

Manufacturing Costs

Our profitability may also be affected by our ability to effectively manage our manufacturing costs. Our manufacturing costs are affected by fluctuations in the price of raw materials. If raw material prices increase, we will have to offset these higher costs either through price increases to our customers or through productivity improvements. Our ability to control our raw materials costs is also dependent on our ability to negotiate with our suppliers for a better price and our ability to source raw materials from reliable suppliers in a cost-efficient manner. In addition, we expect that an increase in our sales volume will enable us to lower our manufacturing costs through economies of scale.

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. We are also affected by regulations in our target markets such as economic incentives to purchasers of electric vehicles, tax credits for electric vehicle manufacturers, and economic penalties that may apply to vehicle manufacturers based on its fleet-wide emissions. Each of these regulations may expand the market size of electric vehicles, which would, in turn, benefit us. We have operations and sales in 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.

Basis of Presentation

We currently conduct our business through one operating segment. Our historical results are reported in accordance with U.S. GAAP and in U.S. dollars.

Components of Results of Operations

Revenues

We derive revenue from the sales of our electric battery products, including LpTO, LpCO, MpCO, HpCO and HnCo battery power systems. While we have historically marketed and sold our products primarily in China and the wider

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Asia-Pacific region, we are also expanding our sales presence internationally. The following table sets forth a breakdown of our revenue by major geographic regions in which our customers are located, for the periods indicated:


		Three Months Ended June 30,									Three Months Ended September 30,
		2022				2023					2022				2023
(In thousands)	(In thousands)	Amt		%		Amt		%		(In thousands)	Amt		%		Amt		%
People’s Republic of China ("PRC")	People’s Republic of China ("PRC")	$	33,946	53	%	$	46,122	62	%	People’s Republic of China ("PRC")	$	26,542	69	%	$	36,289	45	%
Other Asia & Pacific countries	Other Asia & Pacific countries	24,622		38	%	18,520		24	%	Other Asia & Pacific countries	7,394		19	%	24,611		31	%
Asia & Pacific	Asia & Pacific	58,568		91	%	64,642		86	%	Asia & Pacific	33,936		88	%	60,900		76	%
Europe	Europe	4,880		8	%	9,337		13	%	Europe	3,432		9	%	19,034		24	%
U.S.	U.S.	966		1	%	974		1	%	U.S.	1,248		3	%	182		—	%
Total	Total	$	64,414	100	%	$	74,953	100	%	Total	$	38,616	100	%	$	80,116	100	%


		Six Months Ended June 30,									Nine Months Ended September 30,
		2022				2023					2022				2023
(In thousands)	(In thousands)	Amt		%		Amt		%		(In thousands)	Amt		%		Amt		%
People’s Republic of China ("PRC")	People’s Republic of China ("PRC")	$	53,784	53	%	$	78,734	65	%	People’s Republic of China ("PRC")	$	80,326	57	%	$	115,023	57	%
Other Asia & Pacific countries	Other Asia & Pacific countries	38,026		38	%	21,669		17	%	Other Asia & Pacific countries	45,420		33	%	46,280		23	%
Asia & Pacific	Asia & Pacific	91,810		91	%	100,403		82	%	Asia & Pacific	125,746		90	%	161,303		80	%
Europe	Europe	7,631		7	%	19,522		16	%	Europe	11,062		8	%	38,556		19	%
U.S.	U.S.	1,641		2	%	2,001		2	%	U.S.	2,890		2	%	2,183		1	%
Total	Total	$	101,082	100	%	$	121,926	100	%	Total	$	139,698	100	%	$	202,042	100	%

We have historically derived a portion of our revenue in a given reporting period from a limited number of key customers, which vary from period to period. The following table summarizes net revenues from customers that accounted for over 10% of our net revenues for the periods indicated:


		Three Months Ended June 30,					Three Months Ended September 30,
		2022		2023			2022		2023
A	A	15	%	*%		A	*%		18	%
B	B	15	%	13	%	B	*%		15	%
C	C	10	%	*%		C	*%		12	%
D	D	10	%	20	%	D	15	%	*%
E						E	12	%	*%


		Six Months Ended June 30,					Nine Months Ended September 30,
		2022		2023			2022		2023
A	A	15	%	*%		A	*%		15	%
D		*%		13	%
E		*%		13	%
B						B	*%		14	%
F	F	*%		12	%	F	11	%	*%

*Revenue from such customers represented less than 10% of our revenue during the respective periods.

Cost of Revenues and Gross Profit

Cost of revenues includes direct and indirect materials, manufacturing overhead (including depreciation, freight and logistics), warranty reserves and expenses, provision for obsolete inventories, and labor costs and related personnel expenses, including stock-based compensation and other related expenses that are directly attributable to the manufacturing of products.

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Gross profit is equal to revenues less cost of revenues. Gross profit margin is equal to gross profit divided by revenues.

Operating Expenses

Operating expenses consist of selling and marketing, general and administrative and research and development expenses.

Selling and marketing expenses. Selling and marketing expenses consist primarily of personnel-related costs associated with our sales and marketing functions, including share-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. Accordingly, we expect that our selling and marketing expenses will continue to increase in absolute dollars in the long term as we expand our business.

General and administrative expenses. General and administrative expenses consist primarily of personnel-related expenses associated with our executive team members, including share-based compensation, legal, finance, human resource and information technology functions, as well as fees for professional services, depreciation and amortization and insurance expenses. We expect to incur additional costs as we hire personnel and enhance our infrastructure to support the anticipated growth of our business.

Research and development expenses. Research and development expenses consist primarily of personnel-related expenses, including share-based compensation, raw material expenses relating to materials used for experiments, utility expenses and depreciation expenses attributable to research and development activities. Over time, we expect our research and development expense to increase in absolute dollars as we continue to make significant investments in developing new products, applications, functionality and other offerings.

Subsidy Income

Government subsidies represent government grants received from local government authorities. The amounts of and conditions attached to each subsidy were determined at the sole discretion of the relevant governmental authorities. Our subsidy income is non-recurring in nature.

Other Income and Expenses

Other income and expenses consist primarily of interest expense associated with our debt financing arrangements, interest income earned on our cash balances, gains and losses from foreign exchange conversion, and gains and losses on disposal of assets.

Income Tax Expense

We are subject to income taxes in the U.S. and foreign jurisdictions in which we do business, namely the PRC, Germany and the UK. These foreign jurisdictions have statutory tax rates different from those in the U.S. Accordingly, our effective tax rates will vary depending on the relative proportion of foreign to U.S. income, the absorption of foreign tax credits, changes in the valuation of our deferred tax assets and liabilities and changes in tax laws. We regularly assess the likelihood of adverse outcomes resulting from the examination of our tax returns by the U.S. Internal Revenue Service (the “IRS”), and other tax authorities to determine the adequacy of our income tax reserves and expense. Should actual events or results differ from our current expectations, charges or credits to our income tax expense may become necessary. Any such adjustments could have a significant impact on our results of operations.

Income tax in the PRC is generally calculated at 25% of the estimated assessable profit of our subsidiaries in the PRC, except that two of our PRC subsidiaries were qualified as “High and New Tech Enterprises” and thus enjoyed a preferential income tax rate of 15%. Federal corporate income tax rate of 21% is applied for our U.S. entity. Income tax in the UK is calculated at an average tax rate of 19% of the estimated assessable profit of our subsidiary in the UK. German enterprise income tax, which is a combination of corporate income tax and trade tax, is calculated at 27.9% of the estimated assessable profit of our subsidiary in Germany.

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Results of Operations

Comparison of the Three Months Ended ~~June~~September 30, 2023 to the Three Months Ended ~~June~~September 30, 2022

The following table sets forth our historical operating results for the periods indicated:


		Three Months Ended June 30,						$ Change			% Change			Three Months Ended September 30,							$ Change		% Change
		2022			2023					2022					2023
Amount in thousands	Amount in thousands																Amount in thousands
Revenues	Revenues	$	64,414		$	74,953		$	10,539		16.4	%	Revenues	$	38,616			$	80,116		$	41,500	107.5	%
Cost of revenues	Cost of revenues	(59,573)			(63,492)			(3,919)			6.6	%	Cost of revenues	(36,623)				(62,232)			(25,609)		69.9	%
Gross profit	Gross profit	4,841			11,461			6,620			136.7	%	Gross profit	1,993				17,884			15,891		797.3	%
		7.5		%	15.3		%							5.2		%		22.3		%
Operating expenses:	Operating expenses:												Operating expenses:
General and administrative expenses	General and administrative expenses	(34,335)			(23,560)			10,775			(31.4)	%	General and administrative expenses	(22,585)				(25,402)			(2,817)		12.5	%
Research and development expenses	Research and development expenses	(10,244)			(9,507)			737			(7.2)	%	Research and development expenses	(11,457)				(13,241)			(1,784)		15.6	%
Selling and marketing expenses	Selling and marketing expenses	(5,810)			(5,897)			(87)			1.5	%	Selling and marketing expenses	(5,561)				(6,031)			(470)		8.5	%
Total operating expenses	Total operating expenses	(50,389)			(38,964)			11,425			(22.7)	%	Total operating expenses	(39,603)				(44,674)			(5,071)		12.8	%
Subsidy income	Subsidy income	576			637			61			10.6	%	Subsidy income	520				442			(78)		(15.0)	%
Operating loss	Operating loss	(44,972)			(26,866)			18,106			(40.3)	%	Operating loss	(37,090)				(26,348)			10,742		(29.0)	%

Other income and expenses:	Other income and expenses:												Other income and expenses:
Interest income	Interest income	420			1,518			1,098			261.4	%	Interest income	870				582			(288)		(33.1)	%
Interest expense	Interest expense	(895)			(487)			408			(45.6)	%	Interest expense	(774)				(491)			283		(36.6)	%
Changes in fair value of warrant liability	Changes in fair value of warrant liability	1,255			—			(1,255)			(100.0)	%	Changes in fair value of warrant liability	101				(42)			(143)		(141.6)	%
Other income, net	Other income, net	10			(243)			(253)			(2530.0)	%	Other income, net	349				127			(222)		(63.6)	%
Loss before income tax	Loss before income tax	(44,182)			(26,078)			18,104			(41.0)	%	Loss before income tax	(36,544)				(26,172)			10,372		(28.4)	%
Income tax expense	Income tax expense	—			—			—			—	%	Income tax expense	—				—			—		—	%
Net loss	Net loss	$	(44,182)		$	(26,078)		$	18,104		(41.0)	%	Net loss	$	(36,544)			$	(26,172)		$	10,372	(28.4)	%
Less: net income attributable to noncontrolling interests		—			11			11			100.0	%
Less: net loss attributable to noncontrolling interests													Less: net loss attributable to noncontrolling interests	—				(42)			(42)		100.0	%
Net loss attributable to Microvast Holdings, Inc.'s shareholders	Net loss attributable to Microvast Holdings, Inc.'s shareholders	$	(44,182)		$	(26,089)		$	18,093		(41.0)	%	Net loss attributable to Microvast Holdings, Inc.'s shareholders	$	(36,544)			$	(26,130)		$	10,414	(28.5)	%

Revenues

Our revenues increased from approximately ~~$64.4~~$38.6 million for the three months ended ~~June~~September 30, 2022 to approximately ~~$75.0~~$80.1 million for the same period in 2023, primarily driven by an increase in sales volume from approximately ~~252.6~~112.2 MWh for three months ended ~~June~~September 30, 2022 to approximately ~~270.2~~319.2 MWh for the same period in 2023.

Cost of Revenues and Gross Profit

Our cost of revenues for the three months ended ~~June~~September 30, 2023 increased by ~~$3.9~~$25.6 million, or ~~6.6%~~69.9%, compared to the same period in 2022. The increase in the cost of revenues was primarily in line with the increased sales, partially offset by $0.4 million of decreased share-based compensation expenses.

Our gross margin increased from ~~7.5%~~5.2% for the three months ended ~~June~~September 30, 2022 to ~~15.3%~~22.3% for the same period in 2023. The increase in gross margin was due to a combination of factors including better economies of scale through improving utilization, more ~~favourable~~favorable product mix and lower raw material prices.

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Operating Expenses

Selling and Marketing

Selling and Marketing expenses for the three months ended ~~June~~September 30, 2023 ~~was~~were stable compared to the same period in 2022.

General and Administrative

General and Administrative expenses for the three months ended ~~June~~September 30, 2023 ~~decreased~~increased by ~~$10.8~~$2.8 million, or ~~31.4%~~12.5%, compared to the same period in 2022. The ~~decrease~~increase in General and Administrative expenses was primarily due to ~~$12.1~~$1.8 million of increased personnel-related expenses, $1.9 million of increased exchange loss and other increases related to business expansion, offset by $2.4 million of decreased share-based compensation ~~expenses, offset by other increases related to business expansion.~~expenses.

Research and Development

R&D expenses for the three months ended ~~June~~September 30, 2023 ~~decreased~~increased by ~~$0.7~~$1.8 million, or ~~7.2%~~15.6%, compared to the same period in 2022. The ~~decrease~~increase in R&D expenses was primarily due to ~~$1.3 million of decreased costs of materials used for experiments, offset by $0.9~~$1.5 million of increased personnel-related expenses as we increased headcount of our research team as a result of our efforts to further develop and enhance our products.

~~Gain on change in fair value of warrant liability~~

For the three months ended June 30, 2023 , we recorded a gain of $0.0 million due to the change in fair value of warrant liability compared to a gain of $1.3 million in the same period of 2022, primarily because of the fair value fluctuation of our warrants.

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Comparison of the ~~Six~~Nine Months Ended ~~June~~September 30, 2023 to the ~~Six~~Nine Months Ended ~~June~~September 30, 2022

The following table sets forth our historical operating results for the periods indicated:


		Six Months Ended June 30,						$ Change			% Change			Nine Months Ended September 30,							$ Change		% Change
		2022			2023					2022					2023
Amount in thousands	Amount in thousands																Amount in thousands
Revenues	Revenues	$	101,082		$	121,926		$	20,844		20.6	%	Revenues	$	139,698			$	202,042		$	62,344	44.6	%
Cost of revenues	Cost of revenues	(96,228)			(105,607)			(9,379)			9.7	%	Cost of revenues	(132,851)				(167,839)			(34,988)		26.3	%
Gross profit	Gross profit	4,854			16,319			11,465			236.2	%	Gross profit	6,847				34,203			27,356		399.5	%
		4.8		%	13.4		%							4.9		%		16.9		%
Operating expenses:	Operating expenses:												Operating expenses:
General and administrative expenses	General and administrative expenses	(60,436)			(43,945)			16,491			(27.3)	%	General and administrative expenses	(83,021)				(69,347)			13,674		(16.5)	%
Research and development expenses	Research and development expenses	(21,553)			(20,368)			1,185			(5.5)	%	Research and development expenses	(33,010)				(33,609)			(599)		1.8	%
Selling and marketing expenses	Selling and marketing expenses	(11,808)			(10,885)			923			(7.8)	%	Selling and marketing expenses	(17,369)				(16,916)			453		(2.6)	%
Total operating expenses	Total operating expenses	(93,797)			(75,198)			18,599			(19.8)	%	Total operating expenses	(133,400)				(119,872)			13,528		(10.1)	%
Subsidy income	Subsidy income	713			714			1			0.1	%	Subsidy income	1,233				1,156			(77)		(6.2)	%
Operating loss	Operating loss	(88,230)			(58,165)			30,065			(34.1)	%	Operating loss	(125,320)				(84,513)			40,807		(32.6)	%

Other income and expenses:	Other income and expenses:												Other income and expenses:
Interest income	Interest income	734			2,899			2,165			295.0	%	Interest income	1,604				3,481			1,877		117.0	%
Interest expense	Interest expense	(1,691)			(946)			745			(44.1)	%	Interest expense	(2,465)				(1,437)			1,028		(41.7)	%
Changes in fair value of warrant liability	Changes in fair value of warrant liability	820			17			(803)			(97.9)	%	Changes in fair value of warrant liability	921				(25)			(946)		(102.7)	%
Other income, net	Other income, net	409			546			137			33.5	%	Other income, net	758				673			(85)		(11.2)	%
Loss before income tax	Loss before income tax	(87,958)			(55,649)			32,309			(36.7)	%	Loss before income tax	(124,502)				(81,821)			42,681		(34.3)	%
Income tax expense	Income tax expense	—			—			—			—	%	Income tax expense	—				—			—		—	%
Net loss	Net loss	$	(87,958)		$	(55,649)		$	32,309		(36.7)	%	Net loss	$	(124,502)			$	(81,821)		$	42,681	(34.3)	%
Less: net income attributable to noncontrolling interests		—			21			21			100.0	%
Less: net loss attributable to noncontrolling interests													Less: net loss attributable to noncontrolling interests	—				(21)			(21)		100.0	%
Net loss attributable to Microvast Holdings, Inc.'s shareholders	Net loss attributable to Microvast Holdings, Inc.'s shareholders	$	(87,958)		$	(55,670)		$	32,288		(36.7)	%	Net loss attributable to Microvast Holdings, Inc.'s shareholders	$	(124,502)			$	(81,800)		$	42,702	(34.3)	%

Revenues

Our revenues increased from approximately ~~$101.1~~$139.7 million for the ~~six~~nine months ended ~~June~~September 30, 2022 to approximately ~~$121.9~~$202.0 million for the same period in 2023, primarily driven by an increase in sales volume from approximately ~~366.6~~478.7 MWh for ~~six~~nine months ended ~~June~~September 30, 2022 to approximately ~~402.8~~722.0 MWh for the same period in 2023.

Cost of Revenues and Gross Profit

Our cost of revenues for the ~~six~~nine months ended ~~June~~September 30, 2023 increased by ~~$9.4~~$35.0 million, or ~~9.7%~~26.3%, compared to the same period in 2022. The increase in the cost of revenues was primarily in line with the increased sales, partially offset by ~~$0.8~~$1.2 million of decreased share-based compensation expenses.

Our gross margin increased from ~~4.8%~~4.9% for the ~~six~~nine months ended ~~June~~September 30, 2022 to ~~13.4%~~16.9% for the same period in 2023. The increase in gross margin was due to a combination of factors including better economies of scale through improving utilization, more ~~favourable~~favorable product mix and lower raw material ~~prices..~~prices.

Operating Expenses

Selling and Marketing

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Selling and Marketing expenses for the ~~six~~nine months ended ~~June~~September 30, 2023 ~~decreased by $0.9 million, or 7.8%,~~was stable compared to the same period in 2022. ~~The decrease in Selling and Marketing expenses was primarily due to $1.8 million of decreased share-based compensation expenses, offset by the increases related to business expansion.~~

General and Administrative

General and Administrative expenses for the ~~six~~nine months ended ~~June~~September 30, 2023 decreased by ~~$16.5~~$13.7 million, or ~~27.3%~~16.5%, compared to the same period in 2022. The decrease in General and Administrative expenses was primarily due to ~~$18.1~~$20.5 million of decreased share-based compensation expenses, offset by $3.7 million of increased personnel-related expenses and the other increases related to business expansion.

Research and Development

R&D expenses for the ~~six~~nine months ended ~~June~~September 30, 2023 ~~decreased by $1.2 million, or 5.5%,~~were stable compared to the same period in 2022. The decrease in R&D expenses was primarily due to (i) $2.1 million of decreased share-based compensation expenses and $0.8 million of decreased costs of materials used for experiments, offset by (i) $1.7 million of increased personnel-related expenses as we increased headcount of our research team as a result of our efforts to further develop and enhance our products; (ii) other increases related to business expansion.

Liquidity and Capital Resources

Since inception, we have financed our operations primarily from capital contributions from equity holders, the issuance of convertible notes and bank borrowings. We expect existing cash, cash equivalents, short-term marketable securities, and cash flows from operations and financing activities to continue to be sufficient to fund our operating and investing activities for at least the next 12 months and thereafter for the foreseeable future.

As of ~~June~~September 30, 2023, our principal sources of liquidity were our cash and cash equivalents, restricted cash and short-term investments in the amount of ~~$195.8~~$114.7 million. ~~We are currently working~~In October 2023, we signed a supplemental agreement with ~~our~~the banks under the 2022 Facility Agreement to extend the drawdown date to June 9, 2024 on the ~~$70.1~~$70.4 million (RMB500 million) that is undrawn under ~~our RMB800 million~~that project finance facility for the construction of our Huzhou capacity expansions. We also have ~~$8.7~~$21.7 million available under a working capital credit line.

The consolidated net cash position as of ~~June~~September 30, 2023 included cash and cash equivalents of ~~$37.0 million, $16.1~~$24.6 million and ~~$0.3~~$0.2 million held by our PRC ~~German~~ and UK subsidiaries, respectively, that is not available to fund our U.S. operations unless funds are repatriated. Should we need to repatriate to the U.S. part or all of the funds held by our international subsidiaries in the form of a dividend, we would need to accrue and pay withholding taxes. 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 the PRC, Europe and the U.S.

Financings

As of ~~June~~September 30, 2023, we had bank borrowings of ~~$49.1~~$55.7 million, the terms of which range from 23 to 4239 months. The interest rates on our bank borrowings ranged from ~~3.65%~~3.40% to 4.8% per annum. As of ~~June~~September 30, 2023, we had convertible bonds outstanding of $43.9 million, with interest rates ranging from 3% to 4%. The convertible bonds are all due in 2027. As of ~~June~~September 30, 2023, we were in compliance with all material terms and covenants of our loan agreements, credit agreements and bonds. Our US operations have no bank or third party debt funding, and as our business and asset base grows in the US, however we expect to enter into debt financing arrangements to support our expansion plans for the US market. If we are unable to raise additional capital when desired, or on terms that are acceptable to us, our business, financial condition and results of operations could be adversely affected.

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. We have used ~~$332.4~~$392.4 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, ~~$93.5~~$122.1 million of the net proceeds were used for working capital as of ~~June~~September 30, 2023. We expect the total capital expenditures related to our capacity expansions in Huzhou, China and Clarksville, Tennessee, which will give us an additional 4 GWh of capacity, to be in the range of $460.0 million to $490.0 million.

We believe we will be able to meet our working capital requirements for at least the next 12 months and fund our expansion plans with proceeds from ~~the Business Combination~~bank borrowings and ~~bank borrowings.~~other third-party debt funding.

To reduce share dilution, we may from time to time repurchase our warrants, including in the open market, by way of tender offers or privately negotiated purchases.

Capital expenditures and other contractual obligations

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Our future capital requirements will depend on many factors, including, but not limited to, funding our planned production capacity expansions and general working capital. We believe the proceeds from the ~~Business Combination~~bank borrowings and ~~bank borrowings~~other

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third-party debt funding will be sufficient to cover the remaining payment of our planned expansions totaling 4GWh and our general working capital needs. In addition, we may in the future enter into arrangements to further increase our production capacity or seek to acquire or invest in complementary businesses or technologies. We may need to seek additional equity or debt financing in order to meet these future capital requirements. If we are unable to raise additional capital when desired, or on terms that are acceptable to us, our business, financial condition and results of operations could be adversely affected.

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 13 – Leases, in the notes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Report on Form 10-Q.

Capital Expenditures

In 2021, we started our capacity expansion plans in Huzhou, China, and Clarksville, Tennessee. ~~We anticipate~~The Phase 3.1 expansion in Huzhou for the production ~~capacity on our Huzhou expansion~~of 53.5Ah cells, modules and packs was completed during Q3 2023 and we expect it will ~~ramp towards~~reach its ~~2GWh~~2 GWh per year design capacity ~~during~~by the ~~second half~~end of the ~~year,~~year. With the Phase 3.1 line now in ~~line with~~full operation we are supplying battery systems using the 53.5ah cell technology to our customers across the globe, and we expect this to result in an increasing ~~customer orders which are skewed towards~~contribution of revenues from European and US customers in the ~~second half of the year.~~foreseeable future.

The 2GWh expansion project in Clarksville, Tennessee which is also dedicated to our new 53.5Ah cell technology is expected to be in trial production ~~in Q4 2023,~~by the end of Q1 2024, with customer shipments anticipated to begin in Q1Q2 2024. The completion of these projects is expected to increase our existing production capacity by 4 GWh once operational. We expect the total capital expenditures related to these capacity expansions in Huzhou, China and Clarksville, Tennessee to be in the range of $460.0 million to $490.0 million, which we ~~plan to~~ finance primarily through the proceeds from the Business Combination, ~~and~~ bank borrowings and other third-party debt funding, which we believe will be sufficient to cover all of the disclosed and estimated costs.

Our planned capital expenditures are based on management’s current estimates and may be subject to change. There can be no assurance that we will execute our capital expenditure plans as contemplated at or below-estimated costs, and we may also from time-to-time determine to undertake additional capital projects and incur additional capital expenditures. As a result, actual capital expenditures in future years may be more or less than the amounts shown.

There have not been any other material changes during the three and ~~six~~nine months ended ~~June~~September 30, 2023 to our contractual obligations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Cash Flows

The following table provides a summary of our cash flow data for the periods indicated:


		Six Months Ended June 30,			Nine Months Ended September 30,
		2022	2023		2022	2023
Amount in thousands	Amount in thousands			Amount in thousands
Net cash used in operating activities	Net cash used in operating activities	(63,535)	(41,008)	Net cash used in operating activities	(58,595)	(70,350)
Net cash used in investing activities	Net cash used in investing activities	(67,913)	(93,401)	Net cash used in investing activities	(84,719)	(153,120)
Net cash generated from financing activities	Net cash generated from financing activities	(3,866)	5,293	Net cash generated from financing activities	34,226	12,153

Cash Flows from Operating Activities

During the ~~six~~nine months ended ~~June~~September 30, 2023, our operating activities used ~~$41.0~~$70.4 million in cash. This decrease in cash consisted of (1) a net loss of ~~$55.6~~$81.8 million and non-cash charges of ~~$53.8~~$79.2 million, of which ~~$9.8~~$14.6 million is depreciation of property, plant and equipment and ~~$35.8~~$51.6 million is non-cash share-based compensation expense; and (2) a ~~$39.2~~$67.8 million decrease in cash flows from operating assets and liabilities including ~~$9.6~~$23.3 million cash outflow due to the net increase of accounts receivable and notes receivable, ~~$16.6~~$54.5 million increase in inventories, ~~$3.7~~$27.3 million ~~decrease~~increase in accounts payable and notes payable, ~~$5.8~~$14.0 million ~~decrease in~~cash outflow from accrued and other liabilities and prepaid expense and other current asset, and ~~$3.5~~$3.3 million cash outflow from other operating assets and liabilities.

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Cash Flows from Investing Activities

During the ~~six~~nine months ended ~~June~~September 30, 2023, cash used in investing activities totaled ~~$93.4~~$153.1 million. This cash outflow primarily consisted 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.

Cash Flows from Financing Activities

During the ~~six~~nine months ended ~~June~~September 30, 2023, cash generated from financing activities totaled ~~$5.3~~$12.2 million. This cash inflow was a result of ~~$9.2~~$18.4 million proceeds from bank borrowings offset by ~~$3.9~~$6.2 million repayment on bank borrowings.

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed 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. Our actual results could differ from these estimates.

There have been no substantial changes to these estimates, or the policies related to them during the ~~six~~nine months ended ~~June~~September 30, 2023. For a full discussion of these estimates and policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Exposure 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. Our 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.

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. 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.

Foreign Currency Exchange Risk

Until our capacity expansion in Clarksville, TNTennessee is in production, our major operational activities are carried out in the PRC and a majority of the transactions are denominated in Renminbi. The volatility of exchange rates depends on many factors that we cannot forecast with reliable accuracy. 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 Renminbi. The effect of an immediate 10% adverse change in foreign exchange rates on Renminbi-denominated accounts as of ~~June~~September 30, 2023, including intercompany balances, would result in a foreign currency loss of ~~$4.5~~$8.3 million. In the event our foreign sales and expenses increase, our operating results may be more affected by fluctuations in the exchange rates of the currencies in which we do business. At this time, we do not, but we may in the future, enter into derivatives or other 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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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 also closely monitor overdue debts. 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. 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 ~~$0.7~~$0.6 million as of ~~June~~September 30, 2023.

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. 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. 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. However, our limited operating history makes it difficult for us to judge the exact nature or extent of the seasonality of our business.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of ~~June~~September 30, 2023. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of ~~June~~September 30, 2023 and believed that the unaudited condensed consolidated financial statements included in this Report fairly represent in all material respects our financial condition, results of operations and cash flows at and for the periods presented in accordance with U.S. GAAP.

Changes in Internal Control Over Financial Reporting

There have been no ~~change~~changes in our internal controls over financial reporting that occurred during the quarter ended ~~June~~September 30, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Pursuant to the Company’s governing documents and indemnification agreements entered into by the Company with each of the named defendants, the Company has indemnified the defendants for all expenses and losses related to the litigation subject to the terms of those indemnification agreements. While the lawsuit is being vigorously defended, other reported lawsuits of this type have resulted in a broad range of outcomes, with each case being dependent on its own unique set of facts and circumstances. Litigation of this kind can lead to settlement negotiations, including negotiations prompted by pre-trial civil court procedures. The outcome of any litigation is inherently uncertain, and there is always the possibility that a court rules in a manner that is adverse to the interests of the Company and the individual defendants. However, the amount of any such loss in that scenario, which could be material, cannot be reasonably estimated at this time.

The Group is also involved in other litigation, claims, and proceedings. The Group evaluates the status of each legal matter and assesses the potential financial exposure. If the potential loss from any legal proceedings or litigation is considered probable and the amount can be reasonably estimated, the Group accrues a liability for the estimated loss. Significant judgment is required to determine the probability of a loss and whether the amount of the loss is reasonably estimated. As of December 31, 2022 and ~~June~~September 30, 2023, based on the information currently available, the Group believes that the loss contingencies that may arise as a result of currently pending ordinary course legal proceedings are not reasonably likely to have a material adverse effect on the Group’s business, results of operations, financial condition, and cash flows.

Item 1A. Risk Factors

In evaluating us and our common stock, we urge you to carefully consider the risks and other information in this Report on Form 10-Q, as well as the risk factors disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and other reports that we have filed with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

There were no unregistered sales of our equity securities during the three months ended ~~June~~September 30, 2023.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits.

The following exhibits are furnished as part of, or incorporated by reference into, this Report on Form 10-Q.


Exhibit Number						Exhibit Title
2.1+						Agreement and Plan of Merger, dated as of February 1, 2021, by and among Tuscan Holdings Corp., TSCN Merger Sub Inc., and Microvast, Inc. (incorporated by reference to the Company’s definitive proxy statement on Schedule 14A, filed with the SEC on July 2, 2021).
3.1						Second Amended and Restated Certificate of Incorporation of Microvast Holdings, Inc. (incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 28, 2021).
3.2						Amended and Restated Bylaws of Microvast Holdings, Inc. (incorporated by reference from Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 28, 2021).
4.1						Specimen Common Stock Certificate (incorporated by reference from Exhibit 4.4 to the Company’s Current Report on Form 8-K, filed with the SEC on July 28, 2021).
4.2						Specimen Warrant Certificate (incorporated by reference from Exhibit 4.5 to the Company’s Current Report on Form 8-K, filed with the SEC on July 28, 2021).
4.3						Warrant Agreement (incorporated by reference from Exhibit 4.4 to the Company’s Registration Statement on Form S-1, filed with the Company on February 26, 2019).
4.4						Registration Rights and Lock-Up Agreement, dated as of July 26, 2021, by and among (a) Microvast Holdings, Inc., (b) the Microvast Equity Holders, (c) the CL Holders, (d) Tuscan Holdings Acquisition LLC, Stefan M. Selig, Richard O. Rieger and Amy Butte, and (e) EarlyBirdCapital, Inc. (incorporated by reference from Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the SEC on July 28, 2021).
4.5						Stockholders Agreement, dated July 26, 2021, by and among (a) Microvast Holdings, Inc., (b) Yang Wu and (c) Tuscan Holdings Acquisition LLC. (incorporated by reference from Exhibit 4.2 to the Company’s Current Report on Form 8-K, filed with the SEC on July 28, 2021).
10.1						Amended and Restated Employment Agreement, dated August 5, 2023, by and between Microvast Holdings, Inc. and Zachariah Ward (incorporated by reference from Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on August 8, 2023).
10.2						Form of Performance Stock Option Award Agreement (incorporated by reference from Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the SEC on August 8, 2023).
10.3*						Severance Agreement of Shane Smith, dated August 23, 2023.
31.1*						Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**						Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**						Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*			Filed herewith.

**			Furnished.

+			Certain schedules to this Exhibit have been omitted in accordance with Item 601(b)(2) of Regulation S-K. The Company hereby agrees to hereby furnish supplementally a copy of all omitted schedules to the SEC upon request.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated: ~~August 7,~~November 9, 2023	MICROVAST HOLDINGS, INC.

	By:	/s/ Craig Webster
	Name:	Craig Webster
	Title:	Chief Financial Officer

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