mvst-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022

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 210 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	o
Non-accelerated filer	x	Smaller reporting company	x
Emerging growth company	x

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

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

As of May 12, 2022, there were 302,538,640 shares of the Company’s common stock, par value $0.0001, issued and outstanding.

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MICROVAST HOLDINGS, INC.

FORM 10-Q

For the Quarter Ended March 31, 2022

Table of Contents


		Page
PART I. FINANCIAL INFORMATION		1

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Shee ts	1

	Condensed Consolidated Statements of Operations	3

	Condensed Consolidated Statement s of Comprehensive Loss	4

	Condensed Consolidated Statements of Changes in Shareholders’ Equity	5

	Condensed Consolidated Statements of Cash Flows	6

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 4.	Controls and Procedures	34

PART II. OTHER INFORMATION		36

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities	38

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Mine Safety Disclosures	38

Item 5.	Other Information	38

Item 6.	Exhibits	38

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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 “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimated,” “believe,” “intend,” “plan,” “projection,” “outlook” or words of similar meaning. 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.

There are important risks, uncertainties, events and factors that could cause our actual results or performance to differ materially from those in the forward-looking statements contained in this document, including:

•risks of operations in the People’s Republic of China (the “PRC” or “China”);

•the impact of the ongoing COVID-19 pandemic;

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

•risks related to cybersecurity and data privacy;

•the impact of inflation;

•changes in availability and price of raw materials;

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

•changes in the markets that we target;

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

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

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

•the risk that we may experience effects from global supply chain challenges, including delays in delivering our products to our customers;

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

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

•the 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;

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

•the risk that we may not be able to develop and maintain effective internal controls; and

•the outcome of any legal proceedings that may be instituted against us or any of our directors or officers.

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, 2021 in Part I, Item 1A and in the Registration Statement on Form S-1, (File No. 333-258978), which was initially filed on August 20, 2021, and as further amended, and subsequent filings with the SEC.

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 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.

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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, 2021		March 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	480,931	$	416,165
Restricted cash	55,178		54,568
Accounts receivable (net of allowance for credit losses of $5,005 and $5,354 as of December 31, 2021 and March 31, 2022, respectively)	88,717		79,970
Notes receivable	11,144		24,688
Inventories, net	53,424		58,081
Prepaid expenses and other current assets	17,127		19,691
Amount due from related parties	85		—
Total Current Assets	706,606		653,163
Property, plant and equipment, net	253,057		271,248
Land use rights, net	14,008		13,999
Acquired intangible assets, net	1,882		1,821
Operating lease right-of-use assets	—		18,388
Other non-current assets	19,738		40,096
Total Assets	$	995,291	$	998,715

Liabilities
Current liabilities:
Accounts payable	$	40,408	$	32,007
Advance from customers	1,526		3,601
Accrued expenses and other current liabilities	58,740		61,103
Income tax payables	666		667
Short-term bank borrowings	13,301		13,335
Notes payable	60,953		70,677
Total Current Liabilities	175,594		181,390
Long-term bonds payable	73,147		73,147
Warrant liability	1,105		1,540
Share-based compensation liability	18,925		32,884
Operating lease liabilities	—		16,146
Other non-current liabilities	39,822		36,233
Total Liabilities	$	308,593	$	341,340

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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, 2021		March 31, 2022
Commitments and contingencies (Note 16)

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, 2021 and March 31, 2022; 300,530,516 and 300,538,640 shares issued, and 298,843,016 and 298,851,140 shares outstanding as of December 31, 2021 and March 31, 2022)	$	30	$	30
Additional paid-in capital	1,306,034		1,320,367
Statutory reserves	6,032		6,032
Accumulated deficit	(632,099)		(676,741)
Accumulated other comprehensive income	6,701		7,687
Total Shareholders’ Equity	686,698		657,375
Total Liabilities and Shareholders’ Equity	$	995,291	$	998,715

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

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


	Three Months Ended March 31,
	2021		2022
Revenues	$	14,938	$	36,668
Cost of revenues	(16,175)		(36,655)
Gross (loss)/profit	(1,237)		13
Operating expenses:
General and administrative expenses	(4,574)		(26,101)
Research and development expenses	(3,786)		(11,309)
Selling and marketing expenses	(3,156)		(5,998)
Total operating expenses	(11,516)		(43,408)
Subsidy income	1,918		137
Loss from operations	(10,835)		(43,258)
Other income and expenses:
Interest income	96		314
Interest expense	(1,846)		(796)
Loss on changes in fair value of convertible notes	(3,600)		—
Loss on changes in fair value of warrant liability	—		(435)
Other (expense)/ income, net	(5)		399
Loss before provision for income taxes	(16,190)		(43,776)
Income tax expense	(109)		—
Net loss	$	(16,299)	$	(43,776)
Less: Accretion of Series C1 Preferred	1,003		—
Less: Accretion of Series C2 Preferred	2,281		—
Less: Accretion of Series D1 Preferred	4,759		—
Less: Accretion for noncontrolling interests	3,971		—
Net loss attributable to Common Stock shareholders of Microvast Holdings, Inc.	$	(28,313)	$	(43,776)
Net loss per share attributable to Common Stock shareholders of Microvast Holdings, Inc.
Basic and diluted	$	(0.29)	$	(0.15)
Weighted average shares used in calculating net loss per share of common stock
Basic and diluted	99,028,297		298,843,016

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

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MICROVAST HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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


	Three Months Ended March 31,
	2021		2022
Net loss	$	(16,299)	$	(43,776)
Foreign currency translation adjustment	(2,913)		986
Comprehensive loss	$	(19,212)	$	(42,790)

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 March 31, 2021
	Common Stock			Additional paid-in capital		Accumulated deficit		Accumulated other Comprehensive loss		Statutory reserves		Total Microvast Holdings, Inc. Shareholders’ Deficit
	Shares	Amount

Balance as of January 1, 2021	99,028,297	$	6	$	—	$	(397,996)	$	7,356	$	6,032	$	(384,602)
Net loss	—	—		—		(16,299)		—		—		(16,299)
Accretion for Series C1 Preferred	—	—		—		(1,003)		—		—		(1,003)
Accretion for Series C2 Preferred	—	—		—		(2,281)		—		—		(2,281)
Accretion for Series D1 Preferred	—	—		—		(4,759)		—		—		(4,759)
Accretion for the exiting noncontrolling interests	—	—		—		(1,394)		—		—		(1,394)
Foreign currency translation adjustments	—	—		—		—		(2,913)		—		(2,913)
Accretion for redeemable noncontrolling interests	—	—		—		(2,577)		—		—		(2,577)
Balance as of March 31, 2021	99,028,297	$	6	$	—	$	(426,309)	$	4,443

SEC Form 10-Q filed by Microvast Holdings Inc.