MVST 10-K & 10-Q changes, risk factors and insider trading

•We primarily produce and sell lithium-based battery systems. Should a viable alternative to lithium-based batteries emerge and gain market acceptance, it could significantly harm our business, financial healthhealth, and operational results. Furthermore, our failure to keep up with rapid technological changes and evolving industry standards within the lithium-based battery market may cause our products to become obsolete and less marketable, resulting in loss of market share to our competitors.

•We may issue additional shares of common stock or other equity or convertible securities, which may depress the market price of our common stockstock. We may sell shares from time to time in “at-the-market” offerings or other private placements to use for general corporate purposes, which may include, among other things, paying or refinancing all or a portion of the Company's indebtedness, capital expenditures, and couldworking makecapital. itAny difficultissuance forof anotheradditional companyshares would result in dilution to acquireexisting us.stockholders.

As noted above and further disclosed in Part II, Item 9A, “"Controls and Procedures”" of this Annual Report, we identified a material weakness in our internal control over financial reporting as of December 31, 2024, and as a result, our management concluded that our disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2024. WhileManagement completed testing of the design and operating effectiveness of these remediated controls. Based on this testing, our management believes the steps taken have improved the effectiveness of our internal control over financial reporting and we have determined that these new or redesigned controls are activelyoperating engagedeffectively, inand we consider the processmaterial weakness previously identified remediated as of designingDecember appropriate31, controls2025. to address this material weakness,However, there can be no assurance that the actions will fully remediate the material weakness in a timely manner or that there will not be additional material weakness in our internal control over financial reporting in the future. If we are unable to remediate the identified material weakness in a timely manner, or at all, or are otherwise unable to maintain effective internal control over financial reporting in the future, our ability to record, process and report financial information accurately, and to comply with our financial reporting obligations, could be adversely impacted. If this occurs, it could jeopardize our ability to comply with our financial reporting obligations, including under SEC rules and regulations, NASDAQ listing standards and potential financial covenants under our financing arrangements, which, in turn, could subject us to regulatory enforcement actions or stockholder litigation, cause us to breach the potential covenants under our financing agreements, limit our ability to access the credit and capital markets, adversely affect investor confidence in us and the value of our common stock, and harm our reputation, which may make it more difficult for us to market and sell products and services to new and existing customers.

WeEffective areDecember 31, 2025, we no longer qualify as a “smaller reporting company” and commencing with our Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2026, we may no longer take advantage of certainreduced scaleddisclosure disclosures available to us. We cannot be certain if the reducedand reporting requirements applicable to smaller reporting companies will make our common stock less attractive to investors.companies.

In prior periods, we disclosed that substantial doubt as to our ability to continue as a going concern existed due to liquidity constraintsconstraint and recurring operating losses.

For the years ended December 31, 2024, 2023 and 2022, we incurred net losses of $195.5 million, $106.4 million and $158.2 million, and generated/(used) cash flows from/(in) operating activities amounting to $2.8 million, $(75.3) million and $(53.9) million, respectively. As of December 31, 2024,2025, wethe Company had working capital of $97.9 million, shareholders’stockholders’ equity of $387.9$410.5 million, andincluding an accumulated deficit of $1,122.2 million, cash and cash equivalents of $73.0$105.0 million, restricted cash of $64.3 million and other current assets of $279.5 million. In addition, asAs of December 31, 2024,2025, wethe heldCompany had outstanding bank borrowings of $111.7$106.3 million, with $70.7$93.1 million due within the next 12 months, a bond payable of $41.7 million that matures in January 2027, a convertible loan with repayment amount of $26.5 million that matures in May 2026, and other current liabilities of $259.5$254.4 millionmillion. andAdditionally, as of December 31, 2025, the Company had $48.2$37.2 million in purchase commitments primarily related to inventory, and $53.2$16.4 million in capital commitments with $30.7$14.2 million due within the next 12 months.

Based on the Company's current business plan, the existing cash and assets held for sale may not be sufficient to fund operations through the next twelve months. These conditions and events raise substantial doubt about ourthe Company's ability to continue as a going concern. However management has concluded that there is not substantial doubt about our ability to continue as a going concern because it is probable that management’s plans regarding cash flow and debt management described in Note 2 to the financial statements and elsewhere in this report will allow the Company to continue as a going concern. These plans are subject to significant uncertainties, including our ability to increase cash flow, the accuracy of our cash flow projections and the fact that our revenues are highly concentrated on a few customers, all of which could have a material adverse effect on our ability to remain a going concern.

As of December 31, 2024,2025, we had outstanding bank borrowings of $111.7$106.3 million of which the amount to be paid in the next 12 months is $70.7$93.1 million, convertible loan of $26.5 million (including the paid in kind interest amount) and other current liabilities of $259.5$254.4 million, includingwhich include accounts payable, notes payable, accrued expenses and other current liabilities.others. We also had purchase commitments for non-cancelable contractual obligations primarily related to purchases of inventory of $48.2$37.2 million as of December 31, 2024.2025.

As of December 31, 2024,2025, the GroupCompany had outstanding payables of $27.3$3.1 million related to the Tennessee facility. The GroupCompany is actively working with suppliers. Some of those suppliers have filed liens while others have filed lawsuits and we have entered into settlement agreements that include stays of proceedings, payment adjustments and lien releases.

The development, design, manufacturemanufacture, and sale of batteries is a capital-intensive business, which we currently finance through various types of financings. As a result of the capital-intensive nature of our business, we expect to sustain substantial operating expenses without generating sufficient revenues to cover these expenditures for a number of years.

Our cash and cash equivalents balances are concentrated in a few locations around the world, with approximately 63% and 74%59% of those balances held outside of the U.S. as of December 31, 2024 and 2023.2025. Cash repatriation costs and restrictions limit our ability to repatriate cash held by our foreign subsidiaries and intercompany dividends. Additionally, the repatriation of cash held by our foreign subsidiaries may result in adverse tax consequences. Any repatriation of cash may be restricted or may result in our incurring substantial costs. For instance, we may be unable to repatriate cash from China and Germany to pay our accounts payable in the U.S. and fund the continued expansion of our U.S. operations. As a result, we must currently, and may in the future be required to, seek sources of cash to fund our operations outside of our subsidiaries, including through the issuance of equity securities, which may be dilutive to existing stockholders, or by incurring additional indebtedness. There can be no assurance that we will be able to secure sources of financing on terms favorable to us, or at all.

Our recent inability to timely pay certain contractors at our Clarksville, Tennessee facility has resulted in the filing of mechanics liens against the Clarksville facility project. The effect of mechanics liens is to secure a contractor's right to payment of past due amounts by using our real property as collateral for such amounts. We have outstanding payables in relation to assets and services provided for the Clarksville expansion amounting to $27.3$3.1 million that are related to our suppliers as of December 31, 2024.2025. Further, there are several suppliers which have filed liens, most of which are with the county in which the Tennessee project is situated, with a total amount of $24.4$23.6 million being claimed against us as of December 31, 2024.2025. We are currently in certain lawsuits with suppliers alleging that we failed to pay for the services performed or equipment or materials delivered. For more information on our pending legal proceedings, please see Note 28.27. Commitments and Contingencies, to the consolidated financial statements included elsewhere in this Annual Report.

We are working to resolve these matters but there is no guarantee that we will be successful in doing so at all or on favorable terms. The filing of mechanics liens and/or litigation could delay the financing or construction project while the matters are resolved, increase the overall cost of the project due to legal fees and potential settlements, limit our ability to obtain financing for our Clarksville, Tennessee expansion project, and/or have a material adverse impact on our business, financial conditioncondition, and operating results.

Our growth is highly dependent upon the adoption of EVs by commercial-vehicle and specialty-vehicle operators and consumers. If the markets for EVs in China, EuropeEurope, or the U.S. do not develop as we expect or develop more slowly than we expect, our business, prospects, financial conditioncondition, and operating results will be harmed, because demand for our products and services will not increase as expected or may even be reduced. The market for alternative fuel vehicles is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, numerous competitors, evolving government regulation and industry standards, frequent new vehicle announcements and changing consumer demands and behaviors.

•perceptions about electric vehicle quality, design, performanceperformance, and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles;

•perceptions about electric vehicle quality, safety (in particular with respect to lithium-ion battery packs), design, performanceperformance, and cost, especially if adverse events or accidents occur that are linked to the quality or safety of electric vehicles;

•perceptions about vehicle safety in general, in particular safety issues that may be attributed to the use of advanced technology, including vehicle electronicselectronics, and regenerative braking systems;

•concerns about charging station standardizations, convenienceconvenience, and cost influencing consumers’ perceptions regarding the convenience of electric vehicle charging stations;

•concerns regarding comprehensive insurance coverage related to electric vehicles;

•developments in alternative technologies, such as advanced diesel, ethanol, fuel cellscells, or compressed natural gas, or improvements in the fuel economy of the internal combustion engine, which could adversely affect sales of electric vehicles;

•the availability and volatility in the cost of natural gas, diesel, coal, oil, gasolinegasoline, and other fuels relative to electricity;

In anticipation of an expected increase in the demand for electric vehicles in the next few years, we have commercialized five types of ultra-fast charging lithium battery technologies (LpTO, LpCO, MpCO, HpCOHpCO, and HnCO). We also intend to continue to invest in R&D of more ultra-fast charging lithium battery products and to expand the range of applications for such batteries. However, the markets we have targeted, primarily those in China, EuropeEurope, and the U.S. may not achieve the level of growth we expect. If any market fails to achieve our expected level of growth, we may have excess manufacturing capacity and may not be able to generate enough revenue to achieve or sustain our profitability.

We have expanded and expect to continue to expand our battery manufacturing capacity to meet the expected demand for our products. Such expansion will require significant capital expenditures. In addition, expansion imposes significant added responsibilities on our senior management and our resources, including financial resources and the need to identify, recruit, maintainmaintain, and integrate additional employees. Our expansion will also expose us to greater overhead and support costs and other risks associated with the manufacture and commercialization of new products. Difficulties in effectively managing the budgeting, forecastingforecasting, and other process control issues presented by such expansion could harm our business, prospects, results of operationsoperations, and financial condition. Even if we succeed in expanding our manufacturing capacity, we may not have enough demand for our products to justify the increased capacity. If there is a persistent mismatch in the demand for our products and our manufacturing capacity, our business, financial conditioncondition, and results of operations could be adversely affected.

If we are unable to increase our manufacturing output because of any of the risks described above, we may be unable to fulfill customer orders or achieve the growth we expect. Under our supply agreements with our customers, we would typically be liable to pay a charge of between 0.001% and 0.5% of the total contract price per day for our delay in delivering products, as well as any resulting costs and expenses incurred by the customers. In addition, if we are unable to fulfill customer orders, our reputation could be affected, and our customers could source battery systems from other companies. With a global supply chain, some raw material lead times are above average and can be challenging when responding to significant increases in customer demand. The combination of the foregoing could adversely affect our business, financial conditioncondition, and results of operations.

Our battery systems contain lithium-ion cells, which have been used for years in laptops and cell phones. On rare occasions, lithium-ion cells can rapidly release the energy they contain by venting smoke and flames in a manner that can ignite nearby materials. Highly publicized incidents of laptop computers and cell phones bursting into flames have focused consumer attention on the safety of these cells. Moreover, there have been numerous widely publicized reports of electric buses bursting into flames, particularly in China. These events have also raised questions about the suitability of these lithium-ion cells for automotive applications. We are aware of at least two incidents occurring in our customers’ vehicles. One incident resulting in a fire arose when an electric bus powered by our battery was left on a disqualified charger overnight. The other incident resulting in a fire involved a bus that was driven through deep water in a flood for over an hour. We have subjected our battery systems to various tests and damaging treatments such as baking, overcharging, crushingcrushing, or puncturing to assess the response of our battery systems to deliberate and sometimes destructive abuse. However, there can be no assurance that a field failure of our battery systems will not occur, which could damage the vehicle in which it is fitted or lead to personal injury or death and may subject us to lawsuits. Moreover, any failure of a competitor’s battery system, especially those that use a high volume of cells similar to ours, may cause indirect adverse publicity for us. Such adverse publicity would negatively affect our brand and harm our business, prospects, financial condition and operating results.

Due to the nature of our industry and our limited operating history, we have a limited customer base and have depended on a small number of customers for a significant portion of our revenue. In the years ended December 31, 2024, 2023 and 2022,2025, we sold our electric battery products to 297,314 343 and 364 customers, respectively.customers. Our top five customers accounted for approximately 60.0%, 48.6% and 36.1%58.4% of our revenues in the years ended December 31, 2024, 2023 and 2022,2025 respectively. Our limited customer base and customer concentration could make it difficult to negotiate attractive prices for our products and could expose us to the risk of substantial losses if a single dominant customer stops purchasing, or significantly reduces orders for, our products. We expect that a limited number of customers will continue to contribute a significant portion of our sales in the near future. Our ability to maintain close relationships with these top customers is essential to the growth and profitability of our business. If we fail to sell our products to one or more of these top customers in any particular period, or if a large customer purchases fewer of our products, defers orders or fails to place additional orders with us, or if we fail to develop additional major customers, our revenue could decline,decline and our results of operations could be adversely affected.

While government programs in the U.S., China and in Europe promote the purchase of electric vehicles, including through disincentives that discourage the use of gasoline-powered vehicles, it is unclear if such policies will continue. Any reduction, elimination or selective application of tax and other governmental programs and economic incentives because of policy changes, the reduced need for such programs due to the perceived success of the electric vehicle, fiscal tightening or other reasons may result in the diminished competitiveness of the electric vehicle industry generally, or our electric vehicles in particular, which would adversely affect our business, prospects, financial condition and results of operations. For example, the current U.S. presidential administration has issued executive orders to revoke certain executive orders from the prior administration, which directed federal agencies to review and potentially revise vehicle fuel efficiency and emissions standards. The revocation of these prior executive orders may decrease the demand and reduce the value of the greenhouse gas credits and similar regulatory credits, which we may sell to other manufacturers. Further, we cannot guarantee that the current governmental incentives and subsidies available for purchasers of electric vehicles will remain available. For example, beginning in 2023, the Inflation Reduction Act of 2022 eliminated the $7,500 federal sales tax credit for sedans that have a manufacturer’s suggested retail price over $55,000 and for SUVs that have a manufacturer’s suggested retail price over $80,000, although a tax credit remains available for vehicles that are leased rather than purchased. In addition, the current U.S. presidential administration has issued a policy statement aimed at eliminating the “electric vehicle mandate,” which targets state emissions waivers and governmental subsidies. Corresponding executive orders may be further issued to implement this policy. If such government programs are reduced or eliminated, or the available benefits thereunder are exhausted earlier than anticipated, demand for electric vehicles may decrease and our sales of electric battery products could be adversely affected. In addition, customers may delay taking delivery of our battery products if they believe that certain electric vehicle incentives will be available at a later date, which may adversely affect our business, financial condition, operating results and prospects.

Major advancements in alternative technologies like fuel cells, advanced diesel, ethanol, hydrogen, natural gas, or breathing batteries could unexpectedly and negatively impact our business, prospects, financial health, and operational results. Existing and other battery technologies, fuels or sources of energy may emerge as customers’ preferred alternatives to our battery products. Any failure by us to develop new or enhanced technologies or processes, or to react to changes in existing technologies, could materially delay our development and introduction of new and enhanced alternative products, which could result in decreased revenue and a loss of market share to our competitors. .For example, research on the electrochemical applications of carbon nanotechnology and other storage technologies is developing at a rapid pace, and many private and public companies and research institutions are actively engaged in the development of new battery technologies based on carbon nanotubes, nanostructured carbon materials and other non-carbon materials. If we fail to adopt these new technologies, or develop new technologies of our own, such technologies may, if successfully developed by our competitors, offer significant performance or price advantages compared with our technologies and our technology leadership and competitive strengths may be adversely affected.

On the other hand, our competitors may improve their technologies or even achieve technological breakthroughsadvancements either as alternatives to lithium-based battery systems or improvements on existing lithium-based battery systems that would render our products obsolete or less marketable. Therefore, our failure to effectively keep up with rapid technological changes and evolving industry standards by introducing new and enhanced products may cause us to lose our market share and to suffer a decrease in our revenue.

The market for batteries used in electric vehicles, light electric vehicles and ESS is intensely competitive and is characterized by frequent technological changes and evolving industry standards. We expect competition to become more intense. Increased competition may result in a decline in average selling prices, causing a decrease in gross profit margins. We have faced and will continue to face competition from other manufacturers of lithium-ion batteries, as well as from companies engaged in the development of batteries incorporating new technologies. There are other competitors capable of manufacturing and delivering fast-charging battery systems that can charge as quickly as our LpTO and LpCO power battery solutions and we cannot assure you that they will not try to enter the markets that we are targeting with our product. For example, certain battery manufacturers offer lithium-based battery solutions that can be fully charged within a similar amount of time as our battery solutions, but with much shorter life cycles compared to our solutions. Other major manufacturers of high-power lithium batteries currently include Panasonic, Samsung SDI, BYD, CATL, Tianjin Lishen, Boston-Power, Wanxiang Group, Amperex TechnologyTechnology, and LG Chem. In addition, vehicle manufacturers, such as GM, Ford, RivianRivian, and Tesla,Tesla have entered the markets for our products and may become our competitors, either directly or through joint venture arrangements with major lithium-based battery manufacturers. Potential customers may choose to do business with these or other established vehicle manufacturers who enter the markets for our products because of their perception that vehicle manufacturers are more stable, have greater manufacturing capacity and have the capability to adapt battery products to their vehicles.

Our large-scale machinery may malfunction unexpectedly, requiring repairs and potentially unavailable spare parts.Unexpectedparts. Unexpected malfunctions of our production equipment may significantly affect the intended operational efficiency. While the manufacturing equipment field is maturing, there are still significant changes and improvements occurring with respect to manufacturing devices. Such changes pose a risk that our manufacturing line will become outdated faster than anticipated. Expenses to upgrade equipment to more cutting-edge designs may be necessary, raising costs.

We currently purchase certain key raw materials for our electrodes and a variety of other components from third parties, some of which we only source from one supplier or from a limited number of suppliers. For the yearsyear ended December 31, 2024, 2023 and 2022,2025, we purchased 19%, 15% and 18% of our raw materials from twoone suppliers.supplier. We execute long-term contracts with suppliers for our key raw materials and components. Due to customer forecast variability, suppliers may be unable to satisfy our future requirements on a timely basis. Moreover, the price of purchased raw materials, components and assembled batteries could fluctuate significantly due to circumstances beyond our control. If our current suppliers are unable to satisfy our long-term requirements on a timely basis, we may be required to seek alternative sources for necessary materials and components, produce the raw materials or components in-house or redesign our proposed products to accommodate available substitutes or at a reasonable cost. However, given our current state of business, we may not be able to enter into the required manufacturing supply agreements with the battery manufacturers and component suppliers. If we fail to secure a sufficient supply of key raw materials and components and we are unable to produce them in-house in a timely fashion, it would result in a significant delay in our manufacturing and shipments, which may cause us to breach our sales contracts with our customers. Furthermore, failure to obtain a sufficient supply of these raw materials and components or produce them in-house at a reasonable cost could also harm our revenue and gross profit margins.

Lingering inflation above the Federal Reserve's target rate, the ongoing conflicts between Russia and Ukraine and in the Middle East, including hostilities with Iran, the war between Russia and Ukraine, and other macroeconomic factors has caused prices to increase across various sectors of the economyeconomy, and we have been impacted by increases in the prices of our raw materials and other associated manufacturing costs. In particular, we have experienced rising costs or volatility in the prices for raw materials such as polyvinylidene difluoride, lithium salts and carbonates. At this time, there can be no assurance that we will be able to pass any portion of such increases on to customers. Further, we currently do not hedge against our exposure to changing raw material prices. As a result, fluctuations in raw material prices could have a material adverse effect on our business, results of operations, and financial condition.

In addition, the Trumpcurrent AdministrationU.S. government has indicated that it may propose a significant increase in tariff rates on various types of goods imported from Asia that could apply to the raw materials we require. In the event that any such possible tariff increases become enacted, they could significantly increase the cost of our imported components whenever the increased rates become effective.

Our future success heavily depends on the continued service of our senior executives and other key employees. In particular, we rely on the expertise and experience of our Chairman, Chief Executive Officer, Mr. Yang Wu, Chief Operating Officer, Dr. Shengxian Wu and our Chiefother Technologysenior Officer, Dr. Wenjuan Mattis.executives. If one or more of our other senior executives are unable or unwilling to continue to work for us in their present positions, we may encounter similar problems, but on a compounded basis. Moreover, if any of our current or former senior executives joins a competitor or forms a competing company, we may lose customers, suppliers, know-how and key personnel. EachMany of our executive officers hashave entered into an employment agreement with us, which contains non-competition and confidentiality clauses. However, if any dispute arises between our current or former executive officers and us, it is hard to predict the extent to which any of these agreements could be enforced in different countries.

We may not have adequate personnel with the appropriate level of knowledge, experience and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the U.S. For example, on March 18, 2025, we filed a Form 12b-25 stating that we required additional time to complete thisour annual report on Form 10-K. Further, we filed a Form 8-K on March 20, 2025 regarding non-reliance on previously issued financial statements due to our error relating to the previously recorded impairment associated with our Clarksville, Tennessee facility.

After initially focusing on the Asia & Pacific regions, we have expanded and continue to expand our presence and product promotion to Europe and the U.S. and elsewhere. For instance, for the yearsyear ended December 31, 2024, 2023 and 2022,2025 we derived 66.5%, 49.0% and 35.2%, respectively,67% of our sales from outside of China, including sales in the U.S., Italy, France, Germany, India, Singapore, the U.K., among others. As a result, we are subject to differences in these markets in regulatory requirements for product testing, intellectual property protection (including patents and trademarks), tax incentive policy, legal systems and rules, marketing costs, fluctuations in currency exchange rates and changes in political and economic conditions.

We typically offer warranties for our battery products against any defects due to product malfunction or workmanship for a period ranges from one to eight years (or up to 3 years in the case of ESS) from the date of purchase. We provide a reserve for these potential warranty expenses, which is based on an analysis of historical warranty issues.

InFor example, in August 2022, the United States passed the IRA, which includesincluded a number of government incentives that support the adoption of energy storage products and services and could potentially benefit the Company and its operations. OnHowever, on January 16, 2025, the U.S. Department of Treasury released its Guidance on Domestic Content Bonus for Clean Energy Credits, which included adjustments impacting battery electric storage systems. The Trump Administration has also issued executed orders that potentially impact ESS and EV operations. For instance, on January 20, 2025, the Trump Administration issued the Unleashing American Energy Executive Order that paused the disbursement of funds appropriated through the IRA. This pause could, among other things, delay or disrupt the rollout of EV charging stations. Further, on July 4, 2025, President Trump signed the One Big Beautiful Bill Act ("OBBBA") into law. The OBBBA fundamentally transforms the IRA's system of clean energy tax credits, which could harm our business, prospects, financial condition and results of operations. The OBBBA introduces accelerated repeal schedules for most renewable energy tax credits, compresses deadlines for certain projects to qualify for credits, enhances domestic content requirements, eliminates several electric vehicle and residential energy incentives, and implements new foreign entity of concern restrictions barring certain foreign entities from accessing credits. Under the OBBBA, the Clean Vehicle (New EVs) Credit program and the Commercial Clean Credit Credit were terminated September 30, 2025, and the Residential Clean Energy Credit and Energy Efficient Home Improvement Credit were terminated December 31, 2025. These terminations occurred earlier than planned under the IRA, with the termination of the Clean Vehicle Credit program occurring seven years earlier than originally planned. However, some of the IRA's incentives, such as the Clean Electricity Investment Credit remain intact for the next several years. Future implementation of the OBBBA, guidance from the U.S. Department of Treasury or other federal administrative agencies, or executive orders or policies issued or adopted by the current administration, could be adverse to our interests and could therefore harm our business, prospects, financial condition and results of operations.

Changes or increases in tariffs, trade restrictions, trade agreements, non-tariff trade barriers, local content requirements, uncertainty surrounding global trade policies, and the imposition of new or retaliatory tariffs against other countries or covering certain products may affect our competitive position and result in increased costs for products manufactured in the United States using inputs from other countries. For example, on February 1, 2025, President Trump imposed a 10% additional tariff on Chinese products imported into the United States and increased this rate by an additional 10% on March 3, 2025. If maintained, these and other potential tariffs yet to be announced or imposedTariffs may have an adverse impactsimpact on general economic conditions and our business, the exact outcomes of which are uncertain and depend on various factors, such as negotiations between the U.S. and China or other foreign countries, the duration of such tariffs, the responses of other countries or regions to such tariffs, the actual increases in the costs of imported foreign products and raw materials, and exemptions or exclusions that may be granted. Should tariffs increase and be sustained, our inventory acquisition and carrying costs may be increased, which costs may be passed on to us and consumers through higher prices for our products. These increased prices may adversely impact our new product sales and demand for such products, potentially impacting our ability to sell them profitably.

As a manufacturer, we are subject to various environmental laws and regulations on air emission,emissions, wastewater discharge, solid waste, noise and the use, generation, and disposal of hazardous materials. Cobalt and lithium are toxic materials that are important raw materials in our batteries. We also use, generate and discharge other toxic, volatile and hazardous chemicals and wastes in our research, development and manufacturing activities. One of our manufacturing sites is in China, and under PRC environmental regulations we are required to maintain the pollutant emission levels at each of our facilities within the levels prescribed by the relevant governmental authorities and obtain a pollution discharge permit for our water and air emissions. We are also required to design and build environmental treatment facilities concurrently with the construction of our manufacturing facilities, where waste air, wastewateremissions, water discharges, and solid waste solids we generate can be treated in accordance with the relevant requirements.

In addition, certain laws and regulations require enterprises like us that generate hazardous waste generators to engage third-party companies whichthat are licensed and qualified to process the hazardous waste, and to collect, store, dispose of and transfer the hazardous waste. If we fail to comply with national and local environmental protection laws and regulations, the relevant governmental authorities may impose fines or deadlines to cure instances of noncompliance and may even order us to cease operations if we fail to comply with their requirements. In particular, any breach by us in connection with requirements relating to the handling of hazardous waste may subject us to monetary damages and fines. In addition, if any third party suffers any loss as a result of our pollutant emission practices, our improper handling of hazardous waste or our noncompliance with environmental regulations, such third parties may seek damages from us. We cannot assure you that we will be able to comply with all environmental laws and regulations at all times as the environmental legal regime is evolving and becoming more stringent in many jurisdictions. If any government imposes more stringent regulations in the future, we will have to incur additional substantial costs and expenses in order to comply with new regulations, which may negatively affect our results of operations. If we fail to comply with any of the present or future environmental regulations in any material aspect or cause any loss to any third parties due to our pollutant emission practices, improper handling of hazardous waste or other environmental noncompliance, we may suffer from negative publicity and may be required to pay substantial fines, pay damages to such third parties, or suspend or even cease operations. Failure to comply with environmental laws and regulations may materially and adversely affect our business, financial condition and results of operations.

To the extent we ship our products overseas, or to the extent our products are used in products sold overseas, they may be affected by laws and regulations on the movement of goods. For example, the transportation of non-rechargeable and rechargeable lithium batteries is regulated by the International Civil Aviation Organization (the “ICAO”), and corresponding rules and regulations of the International Air Transport Association (the “IATA”), the U.S. DOT’s Pipeline & Hazardous Materials Safety Administration (the “PHMSA”), Dangerous Goods Regulations and the International Maritime Dangerous Goods Code, and in China by the General Administration of Civil Aviation of China and the Maritime Safety Administration of the PRC. These regulations are based on the United Nations,Nations or(the UN,“UN”), Recommendations on the Transport of Dangerous Goods Model Regulations and the UN Manual of Tests and Criteria. We currently ship our products pursuant to ICAO, IATA and PHMSA hazardous goods regulations. The regulations require companies to meet certain testing, packaging, labeling and shipping specifications for safety reasons. We believe we are in material compliance with all current PRC and international regulations for the shipment of our products and will seek to comply with any new regulations that are imposed. We also believe we have obtained all required certificates for the safe transport of our lithium battery products by airair, water, and water.land. If we are unable to comply with the new regulations, however, or if regulations are introduced that limit our ability to transport our products to customers in a cost-effective manner, this could have a material adverse effect on our business, financial condition and results of operations.

We are subject to a variety of litigation, environmental, health and safety and other legal compliance risks. These risks include, among other things, possible liability and legal compliance risks relating to product liability matters, securities law matters, personal injuries, intellectual property rights, contract-related claims, government contracts, health and safety liabilities, environmental matters and compliance with U.S. and foreign laws, competition laws and laws governing improper business practices. We or one of our business units could be charged with alleged wrongdoing as a result of such matters. If convicted or found liable, we could be subject to significant fines, penalties, repayments or other damages (in certain cases, treble damages). As a business with international reach, we are subject to complex laws and regulations in jurisdictions in which we operate, including the U.S., China, the E.U. and the U.K. ThoseThese laws and regulations may be interpreted in different ways. They may also change from time-to-time, as may related interpretations and other guidance. Changes in laws or regulations could result in higher expenses and payments, and uncertainty relating to laws or regulations may also affect how we conduct our operations and structures our investments and could limit our ability to enforce our rights. See the section titled “Business — Legal Proceedings.”

We transact business globally and have foreign currency risks related to our revenue, costs of revenue, operating expenses and localized subsidiary debt denominated in currencies other than the U.S. dollar. To the extent we have significant revenues denominated in such foreign currencies, any strengthening of the U.S. dollar would tend to reduce our revenues as measured in U.S. dollars, as we have historically experienced. We have also experienced, and will continue to experience, fluctuations in our net income as a result of gains (losses) on the settlement and the re-measurement of monetary assets and liabilities denominated in currencies that are not the local currency (primarily consisting of our intercompany and cash and cash equivalents balances). In addition, a portion of our costs and expenses have been, and we anticipate will continue to be, denominated in foreign currencies. If we do not have fully offsetting revenues in these currencies and if the value of the U.S. dollar depreciates significantly against these currencies, our costs as measured in U.S. dollars as a percent of our revenues will correspondingly increase and our margins will suffer. As a result, our operating results may be harmed. The value of our securities will be indirectly affected by the foreign exchange rate between the U.S. dollar and RMB and between those currencies and other currencies in which our sales may be denominated. Appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. Fluctuations in the exchange rate will also affect the relative value of any dividend we issue that will be exchanged into U.S. dollars, as well as earnings from, and the value of, any U.S. dollar-denominated investments we make in the future. It is difficult to predict how RMB exchange rates may change.

Our mission is to accelerate the global transition to electrification by delivering innovative battery solutions that support the adoption of electric vehicles and renewable energy. A key strategic focus is to be inbecome a positionleader to leadin U.S. domestic battery production, reducing reliance on overseas suppliers, and strengthening national energy independence. We believe that this mission, along with our engineering expertise, vertically integrated business model, and our focus on continuous investment in our technologyresearch and operationsdevelopment willand deliveroperations, differentiates us from competitors and positions us for long-term targeted revenue and income growth.

ThroughWe employ a vertically integrated approach, which we havebelieve developedprovides a competitive advantage in optimizing performance and cost. Our proprietary technologiestechnology spanningstack spans the entire battery system—fromsystem, theincluding core cell materials of a battery cell (cathode, anode, electrolyte, and separator), tocells, modules, packs, thermal management systemssystems, and advancedintelligent softwarebattery controls.management Oursystems. This end-to-end expertise has driven critical advancements in ultra-fast charging, high energy density, long lifespan,cycle life, and safety—safety, all critical factors for commercial transportation and ESS applications. With significant in-house capabilities in design, testing, and R&D, we continue to build an industry-leading body of knowledge in battery chemistry and performance.

We operate as a single reportable segment. Our business includes the design, development, manufacturing, sales, and leasing of battery components and systems primarily for electric commercial vehicles and ESS. The Company evaluates segment performance based on geographic revenue growth,and operating income, and geographic breakdowns.income. In accordance with ASU 2023-07, we have expanded our segment disclosures to provide enhanced insights into key financial metrics.metrics in Note 23 – Segment Information.

Our financial performance is driven by development and sales of new products with innovative technology. Our ability to develop innovative technology has been and will continue to be dependent on our dedicated research team. As part of our efforts to develop innovative technology, in October 2021, we expanded our R&D footprint in Orlando by purchasing a 75,000 square foot facility dedicated to R&D. We plan to continue expanding our R&D presence in the U.S. We also plan to continue leveraging our knowledge base in our overseas locations, including 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.

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. AnyThese reductionincentives are subject to evolving geopolitical dynamics, including Foreign Entity of Concern restrictions and domestic content requirements. We continuously monitor these shifts, as any reduction, elimination, or eliminationdisqualification offrom governmental economicsuch incentives maycould resultadversely in reducedaffect demand for our products and adverselyour affect ouroverall financial performance.

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

The battery industry is subject to stringent and evolving environmental regulations, particularly concerning hazardous waste management, pollution control, and sustainability requirements. Over time, these regulations have become increasingly strict, impacting both product costs and gross margins. In the U.S., newly proposed RCRA regulations for lithium batteries under the EPA are expected to be finalized this year and become effective in 2027, which would create a new waste category specifically for lithium batteries and establish new requirements for transportation, handling, and storage. Compliance with these standards requires continuous investment in manufacturing processes, material sourcing, and waste disposal practices to ensure adherence to environmental mandates across multiple jurisdictions.

Additionally, government policies and economic incentives play a critical role in shaping demand for electricthe vehicles (EVs)EV and energyESS storage systems (ESS).markets. Incentives such as EV purchase subsidies, tax credits for battery manufacturers, and renewable energy project grants have historically supported market growth. Similarly, carbon emission penalties and fleet-wide regulatory requirements for automakers further drive the adoption of zero-emission transportation and clean energy solutions. These policies expand our total addressable market, creating opportunities for increased sales and broader adoption of our battery technologies. However, changes in these incentives—such as reductions or eliminations of subsidies—could negatively affect demand for our products.

This section of this Form 10-K generally discusses 20232025 and 2024 items and year-to-year comparisons between 20232025 and 2024. Discussions of 20222023 items and year-to-year comparisons between 20222024 and 2023 are not included in this Form 10-K, and can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Form 10-K filed on AprilMarch 1,31, 2024.2025.

We derive revenue from the sales of our electric battery products, including LpTO, LpCO, MpCO, HpCOproducts and HnCo battery power systems.components. While our sales have historically been concentrated in China and the broader Asia-Pacific region, weour arerevenue activelymix expandinghas shifted significantly toward EMEA, which accounted for the largest portion of our internationalrevenue presencemix for both 2025 and 2024. This shift reflects our strategy to capture growinghigher-margin demandopportunities in keythe globalEuropean markets.commercial vehicle sectors.

The following table provides a breakdown of our revenue by major geographic regions, based on the locations of our customers, for the periods indicated (in thousands, except percentages):

We have historically derivedreceived a portion of our revenue in a given reporting period from a limited number of key customers, which have varied from period to period. For the year ended December 31, 2025, the two largest customers accounted for 22% and 17% of our net revenues respectively. In 2024, one customer accounted for 39% of our net revenues. In 2023, two customers accounted for 18% and 11% of our net revenues.

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

Our operating expenses consist of selling and marketing, general and administrative expenses (“G&A”), and research and development expenses (“R&D”), expenses.selling and marketing expenses (“S&M”), and impairment loss of long-lived assets.

General and administrative expenses. General and administrativeG&A expenses primarily comprise personnel-related costs for our executive, legal, finance, human resources, and IT teams, along with professional service fees, depreciation, amortization, and insurance costs. As we scale operations, we anticipate additional expenditures for personnel hiring, infrastructure development, and compliance-related activities. These investments are necessary to support our anticipated growth and ensure operational efficiency.

Research and development expenses. R&D expenses.expenses primarily include salaries and stock-based compensation for our engineers and scientists, as well as raw material costs for experimental development, utility expenses, and depreciation costs related to R&D activities. As we continue to invest in new product development, advanced battery technologies, and enhanced functionality, we expect R&D expenditures to increase in absolute dollar terms. These investments are critical to maintaining technological leadership and delivering next-generation battery solutions to the market.

Other income and expenses consist primarily of thefair value changes of warrant liability and convertible loan, these figures are highly sensitive to fluctuations in our stock price. This section also includes interest expense associated with our debt financing arrangements, interest income earned on our cash balances, gainsbalances and losses from foreign exchange conversion, and gains and lossesgain on disposaldebt of assets.restructuring.

Income tax in China is generally calculated at 25% of the estimated assessable profit of our subsidiaries in China, except that two of our subsidiaries in China are qualified as “High and New Tech Enterprises” and thus enjoyreceive a preferential income tax rate of 15%. The federal corporate income tax rate of 21% is applied for our U.S. entities. Our income tax in the U.K. is calculated at an average tax rate of 19% of the estimated assessable profit of our subsidiary in the U.K. The German enterprise income tax, which is a combination of corporate income tax and trade tax, is calculated at 29.1% of the estimated assessable profit of our subsidiary in Germany.

The following table sets forth our historical operating results for the periods indicated (in thousands, except percentages):

Our revenue increased from $306.6 million in 2023 to $379.8 million in 2024,2024 to $427.5 million in 2025, reflecting a 23.9%12.6% year-over-year (YoY) growth. This expansion was primarily driven by a 41.6%16.5% increase in sales volume, rising from 1,139.6 MWh in 2023 to 1,613.6 MWh in 2024.2024 to 1,879.5 MWh in 2025. This volume growth was supported by rising demand for our battery cell products from existing and new customers across the European and U.S. markets. Our full-year revenue was impacted by evolving regulatory shifts in the Korean market and customer platform ramp up delays.

In evaluating us and our common stock, we urge you to carefully consider the risks and other information set forth below and elsewhere in this Report, 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, 2025, 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.

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 interim consolidated 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. See the risk factors included in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2025 and in Part II, Item 1A of this Quarterly Report for further discussion of the risks and uncertainties that could affect our business, financial condition and results of operations.

Founded in 2006 and headquartered in Stafford,Houston, Texas, Microvast Holdings, Inc. (NASDAQ: MVST) isstrives to be a global leader in advanced specialized battery technologies. Since our public listing in 2021, we have focused on delivering high-performance lithium-ion battery solutions for the next generation of commercial and industrial electrification. We specialize in the design, development, and manufacturing of battery components and systems primarily for electric commercial vehicles and energy storage systems (“ESS”). We have recently shiftedaligned our commercial priorities and resources towardsto certainfocus newon andselected upcomingnear-term opportunities in the commercial vehicle opportunitiesmarket, while remaining poisedcontinuing to increaseevaluate activityfuture in ESSopportunities in the future.ESS market. Our guiding principle is to innovate lithium-ion battery designs from the ground up without relying on legacy technologies. We believe that this approach allows us to create purpose-built solutions for new markets, rather than repurposing existing ones.

Our ability to scale depends on the timely expansion of our manufacturing footprint. As of MarchJune 31,30, 2026, our order backlog was primarily composed of long-term transit and logistics partners in Europe. To address this demand, we have utilized our capital resources to strategically expand our global production capabilities.

To support our product portfolio, we are building a second 2 GWh production line (Phase 3.2) at our Huzhou, China facility. While thisThe new Phase 3.2 line is primarily configured for the manufacturing of our next-generation 120Ah high-energy cells, it has been designed with flexible tooling and process architecture to accommodate multiple cell formats, including the 48Ah, 53.5Ah, 48Ah,55Ah, and 55Ah120Ah variants. The clean roomsInstallation and utility equipment installation have been completed for Phase 3.2. Installationcommissioning of the production equipment ishave been completed, with commissioning and pilotwe productionanticipate underway.continued Thiscapacity ramp-up during the second half of 2026. We believe this investment enhances our agile manufacturing capability and reinforces our commitment to delivering high-performance solutions across diverse application scenarios. Additionally, we have pilot lines utilized for prototyping and testingtesting. and ourOur Germany facility produces VDA modules.

The battery industry is subject to stringent and evolving environmental regulations, particularly concerning hazardous waste management, pollution control, and sustainability requirements. Over time, these regulations have become increasingly strict, impacting both product costs and gross margins. In the U.S., newly proposed RCRA universal waste regulations for lithium batteries are expected to be finalized by the EPA as early as August 2027, which would create a new waste category specifically for lithium batteries and establish new requirements for transportation, handling, and storage. Compliance with these standards requires continuous investment in manufacturing processes, material sourcing, and waste disposal practices to ensure adherence to environmental mandates across multiple jurisdictions.

As a global company with operations and sales in China, the Asia-Pacific region, Europe, and the U.S., we are also exposed to trade policies, tariffs, and regulatory shifts that could impact our ability to meet projected sales and maintain profit margins. Any significant changes in international trade agreements, supply chain restrictions, or geopolitical tensions may influence production costs, material sourcing, and cross-border sales strategies. Changes in tariff policy in particular, whether threatened or implemented, may raise costs for consumers which could lead to softened consumer demand. InFor addition,example, becauseon ourJuly manufacturing23, center2026, isthe locatedcurrent inpresidential China,administration ongoing trade developments betweenof the United States announced the imposition of 10% - 12.5% tariffs on imports from sixty economies under Section 301 of the Trade Act of 1974. The current situation with respect to tariff policy is dynamic, and China,the suchultimate effect will be dependent on the magnitude and duration of the tariffs, the outcome of litigation, and the countries implicated, as importwell and export controls, may complicateas our ability to relymitigate ontheir those manufacturing centers for continued production. Navigating these regulatory complexities is essential to sustaining our competitive position and long-term growth trajectory.impact.

We derive revenue from the sales of our electric battery products and components to the commercial vehicle market. While historically concentrated in the Asia-Pacific region, our revenue mix has shifted significantly toward Europe which accounted for the largest portion of our revenue mix for boththe six months ended June 30, 2026 and 2025. This shift reflects our strategy to capture higher-margin opportunities in the European commercial vehicle sectors.

We issued $2.7 million tariff refunds to U.S. customers in May 2026. Before the tariff refunds were recorded as a reduction to our revenue in the current period, a total of $931 thousand and $1.2 million in revenue was realized in the United States for the three months and six months ended June 30, 2026, respectively. The following table sets forth a breakdown of our net revenue by major geographic regions, based on the locations of our customers, for the periods indicated (in thousands, except percentages):

We have historically received a significant 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 the twothree largest customers that each accounted for over 10% of our net revenues for the periods indicated:

Our revenues for the three and six months ended MarchJune 31,30, 2026 were materially concentrated with a small number of customers. The composition of our largest customers has historically varied from period to period, and the level of revenue concentration with any individual customer has fluctuated, in some cases significantly, between reporting periods.

Selling and Marketing Expenses. S&M expenses include personnel-related costs for our sales and marketing teams, including salaries, share-based compensation, and commission-based incentives. These expenses also cover advertising, promotional activities, and customer engagement efforts to drive product awareness and sales growth. As we continue to expand, we plan to hire additional sales personnel, enhance marketing programs, and strengthen customer relationships. Consequently, S&M expenses are expected to increase in absolute dollar terms over the long term.

Other income and expenses consist primarily of fair value changes of the warrant liability and the convertible loan,loan described in Note 14 to the Financial Statements included herein (the "Convertible Loan"), these instruments are highly sensitive to fluctuations in our stock price. This section also includes interest expense associated with our debt financing arrangements, interest income earned on our cash balances, and foreign currency gains and losses.

Comparison of the Three Months Ended MarchJune 31,30, 2026 to the Three Months Ended MarchJune 31,30, 2025

Our revenues for the three months ended MarchJune 31,30, 2026 decreased by $55.9$4.1 million, or 48.0%,4.5%, compared to the same period in 2025. The decrease was primarily driven by a 48.9%$2.7 million tariff refund issued to a U.S. customer, which was recorded as a reduction to our revenue in sales volume from approximately 535.7 MWh for the threecurrent months ended March 31, 2025 to approximately 273.9 MWh for the same period in 2026.period.

During the three months ended MarchJune 31,30, 2026, the Company observed a moderation in global electric vehicle demand growth, primarily driven by the expiration of government incentive programs and shifting regulatory frameworks in key regions. Our revenue and delivery schedules were also impacted by broader macroeconomic headwinds, including geopolitical instability and evolving tariff structures, which contributed to market volatility and have influenced customer procurement cycles.

Our cost of revenues for the three months ended MarchJune 31,30, 2026 decreasedincreased by $32.0$1.9 million, or 43.6%,3.1%, compared to the same period in 2025, primarily duedriven toby higher raw material prices during the decreasefirst inhalf salesyear volumes.of 2026, partially offset by a one-time $4.3 million recognition of tariff refunds.

Our gross profit margin was 31.6%29.5% for the three months ended MarchJune 31,30, 2026 compared to 36.9%34.7% in 2025. The decrease in gross margin was primarily due to higher raw material prices and lower production utilization, which reduced fixed cost absorption.absorption, slightly offset by the one-time recognition of the tariff refunds.

Our gross margin profile remains subject to external pressures, including inflationary trends in raw material pricingpricing, duties and tariffs, and elevated logistics and freight expenses resulting from ongoing global supply chain disruptions and geopolitical conflicts. The implementation of new tariff frameworks has increased the cost of goods sold. While we continue to implement cost-mitigation strategies, these macroeconomic factors, combined with a phase-out of regional subsidies for electric vehicle adoption, have contributed to a challenging environment for near-term profitability across the battery manufacturing sector.

General and administrative expenses for the three months ended MarchJune 31,30, 2026 decreasedincreased by $1.2$2.7 million, or 8.3%,24.2%, compared to the same period in 2025. This reduction in G&A expensesincrease was primarily due to $2.2 million decrease of allowance for credit loss due to improved credit management and a $1.0 million decrease of employee cost which was partially offset by a $1.5$2.6 million increase in legal and other professional service fees.

Research and development expenses for the three months ended MarchJune 31,30, 2026 increased by $0.6$1.1 million, or 6.8%,14.8%, compared to the same period in 2025. The increase in R&D expenses was primarily due to thean expansionincrease ofin labor costs as we expanded our domestic R&D presenceinvestment in thenew U.S.product development.

Selling and marketing expenses for the three months ended MarchJune 31,30, 2026 decreasedincreased by $1.5$1.3 million, or 21.4%,38.5%, compared to the same period in 2025. This reduction in S&M expensesincrease was primarily due to $1.3a $1.5 million ofincrease decreasedin service fees.fees associated with customer retention initiatives, partially offset by a decrease in personnel costs.

Subsidy income decreased from $1.4$995 millionthousand for the three months ended MarchJune 31,30, 2025 to $3$15 thousand in the current-year period. The amounts are the one-time awards granted by the Chinese government in 2025 and 2026.

Foreign exchange gain decreased from $3.7a gain of $7.2 million for the three months ended MarchJune 31,30, 2025 to a loss of $6.9$4.7 million for the three months ended MarchJune 31,30, 2026. The foreign exchange loss for the three months ended MarchJune 31,30, 2026 was primarily due to unfavorable changes in the U.S. dollar and Euro exchange rates relative to the changes in RMB exchange rates.

For the threesix months ended MarchJune 31,30, 2026, we recorded a gain of $63.8$58.0 million. The gain was primarily drivendue byto the decreasechange inof the Company'sfair stockvalue price overof the remeasurementConvertible period.Loan Forbefore furtherit discussionwas regardingsettled theon valuationMay methodology28, and inputs,2026, see Note 14 – Convertible Loan measured at fair value.

Since inception, we have financed our operations primarily from capital contributions from equity holders, the issuance of convertible notes and bank borrowings. As of MarchJune 31,30, 2026, our principal sources of liquidity were our cash and cash equivalents and restricted cash totaling $174.0$143.1 million, of which $126.1$127.8 million was comprised of cash and cash equivalents.

Of the cash and cash equivalents as of MarchJune 31,30, 2026, $52.5$39.7 million is held by our Chinese subsidiaries and $18.8$23.5 million is held by our European subsidiaries. These funds are generally intended to support local operations. If we were to repatriate these funds to the U.S., we may be required to accrue and pay withholding taxes. We currently intend to retain available funds and any future earnings to support ongoing operation and expansion efforts in China, Europe and the U.S.

ManagementWe evaluated whether there are conditions andor events,events considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern within one year after the date of the consolidated financial statements are issued. Based on our currentrevised business plan, weour projected that the existing cash andflow assets held for sale wouldmay not be sufficient to fund our operations throughand meet debt obligations over the next twelve months. Additionally, recent equity market conditions and business performance have rendered our equity funding unfavorable as a primary liquidity mechanism. These conditions and events raise substantial doubt about ourthe Company's ability to continue as a going concern.

Management hasis implementedevaluating and pursuing several primary plansinitiatives intended to alleviateimprove thesethe conditionsCompany’s liquidity position, including: