Microvast Holdings, Inc.

NOTE 1. BACKGROUND AND BASIS OF PRESENTATION

Organization

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 , Microvast, Inc. and Tuscan Holdings Corp. (“Tuscan”) consummated the 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.

The Company and its subsidiaries are primarily engaged in developing, manufacturing, and selling advanced battery technology products for use in commercial electric vehicles and battery energy storage systems across the globe.

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by GAAP for complete financial statements and should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2025. In the Company's opinion, all adjustments, consisting only of normal recurring items, which are considered necessary for a fair presentation of the consolidated financial statements, have been included.

The results of operations for the nine months ended September 30, 2026 are not necessarily indicative of results to be expected for any future interim period or the year ending December 31, 2026.

Certain reclassifications have been made to conform prior period information to the current presentation. The reclassifications did not have a material effect on the Company's financial position, results of operations, or cash flows. During the three and nine months ended September 30, 2026, the Company presents the foreign exchange (loss) gain as a separate line item, which was previously included as portion of the general and administrative expenses on the consolidated statement of operations. The change has no impact on the net loss or otherwise materially change the consolidated financial statements.

Liquidity and Going Concern

The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern, which contemplates the continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the normal course of business.

As of September 30, 2026, the Company’s financial condition and operating results raised substantial doubt about its ability to continue as a going concern. The Company experienced a significant decline in revenue and gross margin during the third quarter of 2026, incurred a substantial operating loss, and continued to generate negative cashflow in operating activities. In addition, the Company had limited working capital and significant current debt obligations, including obligations that require refinancing or repayment during the next twelve months from the date of these financial statements are issued (the “assessment period”).

The Company’s near-term debt obligations include: (i) $22.4 million (RMB149.9 million) of principal under the 2022 Facility Agreement (as defined below) entered into by Microvast Power Systems Co., Ltd. (“MPS”), the Company’s principal operating subsidiary in China, which was fully paid and retired subsequent to September 30, 2026; (ii) $41.7 million (RMB 285 million) of convertible bonds issued by MPS to Huzhou Saiyuan, due, together with accrued interest, on or before January 31, 2027; (iii) $84.0 million of short-term bank loans of the Company’s PRC subsidiaries, each with an original maturity of 12 months or less, which mature at various dates during the next twelve months; and (iv) $373 thousand, $149 thousand, $13.8 million and $149 thousand of principal under MPS’s long-term working capital loans, due December 19, 2026, March 18, 2027, June 19, 2027 and September 18, 2027, respectively. The Company’s ability to make these payments depends on its ability to refinance or extend these obligations, and while negotiations remain ongoing with the Company’s lenders regarding the refinancing or extension of its debt obligation, and there can be no assurance that such negotiations will be successful. A failure to make any of these payments will result in an event of default under the relevant debt arrangement and the acceleration of substantially all of the Company’s bank borrowings and bonds payable and the enforcement of security over MPS’s assets and the Company’s equity interest in MPS. See Note 6 – Bank Borrowings and Note 8 – Bonds Payable.

As of September 30, 2026, the Company had stockholders' equity of $472.8 million, including an accumulated deficit of $1,162.8 million, cash and cash equivalents of $84.8 million, restricted cash of $39.6 million, total current assets of $352.7 million, and total current liabilities of $355.8 million, resulting in working capital deficit of $3.1 million. Current bank borrowings, notes payable and current bonds payable totaled approximately $196.0 million. Additionally, as of September 30, 2026, the Company had $34.7 million in purchase commitments primarily related to inventory, and $6.5 million in capital commitments with $5.6 million due within the next 12 months. Certain current assets, including restricted cash, accounts receivable and inventory, are not expected to be available to satisfy obligations as they become due.

For the three months ended September 30, 2026, the Company generated revenue of $45.8 million and a gross profit of $2.4 million, a significant decrease compared to $123.3 million revenue and $46.4 million gross profit in the same quarter last year. For the nine months ended September 30, 2026, net cash used in operating activities was $65.4 million, and cash, cash equivalents and restricted cash decreased by $44.8 million. Furthermore, the Company’s first quarter has historically reflected nominal reductions in activity related to the Chinese New Year holiday.

In addition, as of the date these consolidated financial statements are issued, a significant portion of the Company’s accounts receivable was overdue, and the Company’s liquidity is substantially dependent on the collection of these overdue amounts. The Company’s revenues are also materially concentrated on a small number of customers, and there is significant uncertainty regarding the level of future orders from certain of its largest customers. There can be no assurance that the Company will collect a portion of these receivables, or at all, or that its significant customers will maintain their current order levels.

Management evaluated whether conditions and events considered in the aggregate raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. Based on the Company's revised business plan, and current cash flow forecasts, the Company’s projected cash flow is not expected to be sufficient to fund operations and meet debt obligations as they come due. Absent additional financing, refinancing, extension or restructuring of its debt obligations, or significant further reductions in costs, the Company expects its available cash to be insufficient to meet its obligations as they come due over the next twelve months. Additionally, recent equity market conditions and business performance have rendered equity funding unfavorable as a primary liquidity mechanism. These conditions and events raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that these consolidated financial statements are issued.

Management is evaluating and pursuing several initiatives intended to improve the Company’s liquidity position, including:

•Implementing a focused commercial recovery plan to rebuild order intake and revenue visibility. Priorities include recovering delayed or reduced orders from existing customers, accelerating qualified customer programs, expanding within product families and regions where the Company can compete profitably, and developing new customers whose qualification and delivery timelines fit the assessment period;

•Establishing an integrated sales-and-operations plan linking confirmed demand to production schedules, material purchases, labor, capacity utilization, and cash requirements, including shift reductions, capacity consolidation, temporary idling or other cash-preservation measure where appropriate and avoid building inventory for speculative demand;

•Negotiating extensions or restructurings of debt obligations within the Company’s China operating entities;

•Pursuing refinancing of short-term bank borrowings as they mature. The Company secured $95.8 million from bank borrowing during the nine months ended September 30, 2026, of which $59.8 million represented refinanced debt. There can be no assurances that the Company will continue to be able to refinance the maturing short-term bank borrowing for the next twelve months on acceptable terms, or at all, and a refinancing plan cannot be deemed to be probable. As of September 30, 2026, the Company was in compliance with all material terms and covenants under its loan agreements, credit agreements, and bonds;

•Evaluating financing alternatives. Financing sources available to the Company have been limited, and any financing that may be available in the near term is expected to be short-term in nature or subject to significant restrictions.

The Company has evaluated whether the plans described above are sufficient to alleviate the substantial doubt about the Company’s ability to continue as a going concern. Under this evaluation, the Company assessed whether it is probable that (1) the plans will be effectively implemented within one year after the date these financial statements are issued, and (2) when implemented, the plans will mitigate the conditions and events that raise substantial doubt. The effectiveness of management plans to address liquidity risks depends in part on factors outside the Company’s control, including customer demand, customer order commitments, operating performance, lender decisions, and capital market conditions. As of the date of this assessment, the cost-reduction program had not been fully implemented, and future refinancing or additional financing sufficient to meet the Company’s liquidity requirements cannot be deemed probable.

After considering the Company’s financial condition, operating results, cash flow forecasts, debt obligations and management’s plans, management concluded that substantial doubt about the Company’s ability to continue as a going concern is not alleviated. The consolidated financial statements have been prepared on a going concern basis and do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary in the event the Company can no longer continue as a going concern.

It cannot be deemed probable that the Company will be able to reduce operating expenses or generate the level of revenue necessary to achieve profitability and generate cash, refinance or extend its maturing borrowing, obtain any needed waivers or amendments from its lenders, or source additional financing on acceptable terms, if at all. Without additional sources of financing, the Company’s ability to continue as a going concern will be materially and adversely impacted, and the Company will be required to significantly reduce, restructure, or cease operation or liquidate its assets, or if necessary, seek relief under applicable reorganization laws. In addition, if MPS fails to settle its debts as and when they fall due, MPS may become subject to a voluntary or involuntary bankruptcy or liquidation proceeding under the Enterprise Bankruptcy Law of the PRC, in which event unrelated third-party creditors may claim rights to some or all of MPS’s assets, which would materially and adversely affect the Company’s business, financial condition, and results of operations.

Recent Accounting Standards

Accounting Pronouncements Not Yet Adopted

In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures” (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amended guidance requires disaggregation of certain expense captions into specified natural expense categories in the disclosures within the notes to the financial statements. In addition, the guidance requires disclosure of selling expenses and its definition. The new guidance is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The guidance can be applied either prospectively or retrospectively. The Company continues to evaluate the impact of this guidance on its disclosures, but plans to adopt this guidance prospectively and conform with the disclosure requirements when it becomes mandatorily effective for the Company's annual report for the year ending December 31, 2027.

In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities, which provides updated guidance on how to recognize, measure, and present government grants. The ASU will be effective for annual reporting periods beginning after December 15, 2028, including interim periods within those fiscal years with early adoption permitted. The Company continues to evaluate the impact of this guidance on its disclosures.

NOTE 2. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following (in thousands):

Change in allowance for credit losses was as follows (in thousands):

NOTE 3. INVENTORIES, NET

Inventories consisted of the following (in thousands):

The Company wrote-down inventories to net realizable value and incurred impairment charges of $9.3 million and $11.1 million for the three and nine months ended September 30, 2026, and $4.7 million for the three and nine months ended September 30, 2025, respectively. The write-downs were related to specialized energy storage system components and other inventories.

NOTE 4. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consisted of the following (in thousands):

(1) See Note 16 – Commitments and Contingencies.

(2) The accrued expenses recorded during the three months ended September 30, 2026 included a $16.5 million of accrued expenses in connection with a proposed settlement of the Schelling Action, of which approximately $11.4 million will be covered by insurance under the Company’s insurance policy, resulting in a net charge of $5.1 million recorded in general and administrative expense on the consolidated statements of operations. See Note 16 – Commitments and Contingencies for additional information.

NOTE 5. PRODUCT WARRANTY

Changes in product warranty were as follows (in thousands):

NOTE 6. BANK BORROWINGS

Changes in bank borrowings were as follows (in thousands):

The Company's PRC subsidiaries enter into short-term loan agreements and bank facilities with certain banks in China from time to time depending on operational needs and negotiation with the banks. The original terms of these loans are with a maximum maturity of 12 months and the interest rates range from 2.40% to 4.85% per annum. The amount of interest expense was $504 thousand and $364 thousand for the three months ended September 30, 2026 and 2025, respectively, and $1.4 million and $1.2 million for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, the outstanding amount of these short-term bank loans was $84.0 million. Subsequent to September 30, 2026, the PRC subsidiaries refinanced $8.9 million short-term bank borrowings.

On September 27, 2022, MPS entered into a $111.5 million (RMB 800 million) loan facilities agreement with a group of lenders led by a bank in China (the “2022 Facility Agreement”). The interest rate is prime plus 115 basis points where prime is based on the Loan Prime Rate published by the National Inter-bank Funding Center of China and is payable on a quarterly basis. The loan facilities can only be used for the manufacturing capacity expansion at the Company’s facility located in Huzhou, China. As of September 30, 2026, MPS had outstanding borrowings of $22.4 million (RMB 149.9 million) under the 2022 Facility Agreement, which were due on December 10, 2026. Subsequent to September 30, 2026, MPS repaid the remaining balance of $22.4 million (RMB 149.9 million), and the 2022 Facility Agreement was fully repaid and retired.

Capitalized interest, which was recorded in construction in progress, was $85 thousand and $231 thousand for the three months ended September 30, 2026 and 2025, respectively, and $355 thousand and $755 thousand for the nine months ended September 30, 2026 and 2025, respectively.

MPS entered intotwo long-term working capital loan agreements with a Chinese bank in June 2025 and March 2026 and borrowed a total $29.8 million or RMB 200 million (RMB 100 million per each agreement). The term of these loans istwo years with interest rates ranging from 2.70% to 2.80% per annum. The interest expense for the three months ended September 30, 2026 and 2025 was $203 thousand and $94 thousand, respectively, and $504 thousand and $94 thousand for the nine months ended September 30, 2026 and 2025, respectively. As of September 30, 2026, MPS had outstanding borrowings of $28.9 million (RMB 194 million) under these agreements with the following repayment schedule:

Certain assets of the Company have been pledged to secure the above bank facilities granted to the Company. The aggregate carrying amount of the assets pledged by MPS as of September 30, 2026 and December 31, 2025 is as follows (in thousands):

Our bank borrowing agreements contain various financial covenants directly related to our subsidiaries’ financial position. As of September 30, 2026 and December 31, 2025, the PRC subsidiaries were in compliance with all material terms and covenants of our bank borrowing agreements.

NOTE 7. OTHER NON-CURRENT LIABILITIES

Other non-current liabilities consisted of the following (in thousands):

NOTE 8. BONDS PAYABLE

Bonds payable consisted of the following (in thousands):

Huzhou Saiyuan Loan

On December 29, 2018, MPS 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 $87.8 million (RMB 600 million). The Company pledged its 12.39% equity holding over MPS to Huzhou Saiyuan to facilitate the issuance of these convertible bonds.

According to the terms of the agreement, if the Company fails to repay the bonds when due, the applicable interest rate will increase to 12%, and Huzhou Saiyuan will have the right, within 60 days after the maturity date, to dispose of the Company’s 12.39% equity interest in MPS in proportion to the amount of matured bonds or to convert the outstanding bonds into an equity interest of MPS based on an entity value of MPS of $950.0 million.

In September 2020 and 2022, MPS entered intotwo supplemental agreements with Huzhou Saiyuan, respectively, to change the repayment schedule as follows: (i) $14.6 million (RMB 100 million) was repaid, together with interest accrued, on or before November 10, 2022, (ii) $14.6 million (RMB 100 million) was repaid, together with interest accrued, on or before December 31, 2022 and (iii) the remaining $43.9 million (RMB 300 million) is to be repaid, together with interest accrued, on or before January 31, 2027. The applicable interest rate will be increased to 12% if the Company is in default on the repayment of the bonds at the due date. The remaining terms and conditions of the convertible bonds were unchanged. The Company has fully complied with the amended repayment schedule to date. With $692 thousand (RMB 5 million) repaid in 2023 and $1.4 million (RMB 10 million) repaid in 2025, the subscription and outstanding balance of the convertible bonds was $41.7 million (RMB 285 million) as of September 30, 2026.

NOTE 9. WARRANTS

The Company had 27.6 million publicly-traded warrants (“Public Warrants”) and 837 thousand private placement warrants issued to Tuscan Holdings Acquisition LLC and EarlyBirdCapital, Inc. (“Private Warrants” and together with the Public Warrants, the “Warrants”) that entitled the holder to purchaseone share of the Company’s common stock at an exercise price of $11.50 per share. During the three and nine months ended September 30, 2026, a gain ofnil and $15 thousand, respectively, were recognized due to the changes of the fair value of the Warrants. As of September 30, 2026, the fair value of the Warrants was nil. The Warrants collectively expired unexercised on July 23, 2026.

On May 28, 2024, the Company also issued a warrant exercisable for 5.5 million shares of common stock at an exercise price of $2.00 per share. The warrant will expire on May 28, 2029. See further discussion in Note 14 – Convertible Loan measured at fair value.

NOTE 10. FAIR VALUE MEASUREMENT

Measured or Disclosed at Fair Value on a Recurring Basis

The Company measured its financial assets and liabilities, including cash and cash equivalents, restricted cash, warrant liability and Convertible Loan at fair value on a recurring basis. Cash and cash equivalents and restricted cash are classified within Level 1 of the fair value hierarchy because they are valued based on the quoted market price in an active market. The fair value of the warrant liability and Convertible Loan are based on significant unobservable inputs, which represent Level 3 measurements within the fair value hierarchy.

As of September 30, 2026 and December 31, 2025, the Company’s assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows (in thousands):

The following is a reconciliation of the beginning and ending balances for Level 3 warrant liability, which was retired during the nine months ended September 30, 2026 (in thousands):

The following is a reconciliation of the beginning and ending balances for Level 3 Convertible Loan, which was retired during the nine months ended September 30, 2026 (in thousands):

NOTE 11. LEASES

The Company is the lessee of some office spaces and warehouses. Certain leases include renewal options and/or termination options, which are factored into the Company's determination of lease payments when appropriate.

Operating lease cost for the three months ended September 30, 2026 and 2025 was $839 thousand and $849 thousand, and for the nine months ended September 30, 2026 and 2025 was $2.6 million and $2.6 million, respectively, which excluded cost of short-term contracts. Short-term lease cost for the three months ended September 30, 2026 and 2025 was $11 thousand and $45 thousand, and for the nine months ended September 30, 2026 and 2025 was $40 thousand and $136 thousand, respectively.

As of September 30, 2026, the Company had operating lease liabilities of $16.9 million, including current portion of $3.4 million, which is presented under accrued expenses and other current liabilities on the consolidated balance sheet. The weighted average remaining lease term was 7.9 years and weighted average discount rate was 5.0%.

Supplemental cash flow information of the leases were as follows (in thousands):

Maturity of operating lease liabilities are as follows (in thousands):

Lessor Accounting

The Company recognized sales-type lease revenue of $1.4 million and $647 thousand respectively, for the three months ended September 30, 2026 and 2025 and $1.7 million and $5.0 million respectively, for the nine months ended September 30, 2026 and 2025. The sales-type lease revenue is included in revenue in the accompanying consolidated statements of operations. As of September 30, 2026, the Company recorded net investment in sales-type leases of $6.6 million including current portion in the amount of $5.3 million, which is presented in accounts receivable on the consolidated balance sheets.

NOTE 12. REVENUE

Revenues by major geographic regions in which the Company's customers are located are as follows (in thousands, except percentages):

(1) The Company issued $2.7 million in tariff refunds to a customer in May 2026, which was recognized as a reduction of revenue for the nine months ended September 30, 2026. Before the revenue reduction, a total of $5.7 million revenue was realized in the United States for the nine months ended September 30, 2026.

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 (see Note 2). 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.

The following table reflects the changes in the Company's contract liabilities (in thousands):

As of September 30, 2026, total transaction price allocated to performance obligations that were unsatisfied or partially unsatisfied was $4.5 million. Of this amount, the Company expects to recognize $1.6 million over the next 12 months and the remainder over the remaining performance obligation period.

NOTE 13. SHARE-BASED COMPENSATION

The Company has granted restricted stock and restricted stock units (collectively, “Restricted Stock”), as well as unrestricted stock and stock options, to employees and directors under the 2021 Equity Incentive Plan. Upon vesting of Restricted Stock, shares of common stock are released to the grantee.

As of September 30, 2026, the Company had approximately 2.2 million shares of service-based Restricted Stock (“RSU”) and approximately 158 thousand shares of performance-based Restricted Stock (“PSU”) outstanding, of which 63 thousand RSU and 23 thousand PSU were vested but not yet released. The Company also had approximately 24.9 million stock options outstanding, of which 23.5 million stock options were exercisable as of September 30, 2026.

For the three and nine months ended September 30, 2026 and 2025, the Company recognized share-based compensation expense related to all share-based awards as follows (in thousands):

NOTE 14. CONVERTIBLE LOAN MEASURED AT FAIR VALUE

On May 28, 2024, Microvast Holdings, Inc. entered into a $25.0 million convertible loan agreement (the “Loan Agreement”) with Mr. Yang Wu, the Company’s Chief Executive Officer and Chairman, which was subsequently amended on March 17, 2025 to extend the maturity date to May 28, 2026.

The loan includes an Initial Term Loan of $12.0 million and a Delayed Draw Term Loan of $13.0 million at an initial interest rate equal to the Secured Overnight Financing Rate (“SOFR”), plus an initial Applicable Margin of 9.75% per annum,3.75% of which shall be paid in kind rather than in cash (collectively, the “Convertible Loan”). The maturity date may be accelerated upon the occurrence and continuance of an event of default in accordance with the terms of the Loan Agreement. The Loan Agreement also provides Mr. Wu with the right to convert the outstanding principal balance of the Convertible Loan, into shares of common stock at an initial conversion rate equal totwo shares of common stock per $1.00 of principal amount to be converted.

The Initial Term Loan of $12.0 million was received in May 2024 and the Delayed Draw Term Loan of $13.0 million was received in July 2024.

The Convertible Loan was secured by a first priority security interest in substantially all of the assets of Microvast Holdings, Inc. and all other entities within the Company as guarantors.

The Company elected the fair value option to account for the Convertible Loan. The fair value was determined by using a discounted cash flow model for the bond component and a Black-Scholes-Merton model for the conversion option, which is considered a Level 3 fair value measurement. Subsequent changes in fair value are presented as gains or losses in the consolidated statements of operations. Interest expense related to the Convertible Loan is included in the changes in fair value.

On May 28, 2026, Mr. Wu elected to convert $25.0 million of the outstanding principal amount into 50.0 million shares of Common Stock at a per share price of $0.50 in accordance with the terms of the Loan Agreement. The remaining principal amount and accrued but unpaid interest, $2.2 million, thereon were settled in cash.

During the three months ended September 30, 2026 and 2025, a loss ofnil and $12.8 million were recognized, respectively. During the nine months ended September 30, 2026 and 2025, a gain of $58.0 million and a loss of $91.0 million were recognized, respectively.

In connection with the Convertible Loan on May 28, 2024, the Company issued to Mr. Wu a total of 5.5 million warrants exercisable for 5.5 million shares of common stock at an initial exercise price of $2.00 per share that expires on May 28, 2029. As of September 30, 2026,5.5 million warrants remained outstanding.

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 (in thousands, except per share data):

Potentially dilutive securities not included in the diluted net loss per share computations because their effect would have been anti-dilutive were as follows (in thousands):

NOTE 16. COMMITMENTS AND CONTINGENCIES

Litigation

Corporate Governance Actions

Stephen Vogel, Ruth Epstein, Stefan Selig, Richard Rieger, Amy Butte, Yang Wu and Yanzhuan Zheng have been named as defendants in litigation filed in the Court of Chancery captioned Matt Jacob v. Stephen A. Vogel, et al., C.A. 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 Stephen Vogel, Ruth Epstein, Stefan Selig, Richard Rieger and Amy Butte 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 complaint further alleges that once the earnings of the combined company became public, the Company's stock dropped, causing losses to investors. The complaint also alleges that Yang Wu and Yanzhuan Zheng aided and abetted these purported breaches. Amy Butte, Yang Wu, and Yanzhuan Zheng filed motions to dismiss the complaint. On March 7, 2026, the Court dismissed the claims against Messrs. Wu and Zheng, without prejudice but denied Ms. Butte's motion to dismiss. On March 30, 2026, the plaintiff served initial discovery requests on the remaining defendants. Amy Butte filed an answer to the complaint on April 15, 2026. On July 22, 2026, the parties entered a Joint Stipulation of Dismissal Without Prejudice, dismissing Amy Butte from the case. On July 23, 2026, the remaining parties requested that the Court set a four-day trial in the summer or fall of 2027. Since that time, the parties have engaged in discussions in an attempt to resolve the matter.

The Company, the directors of the Company predecessor, Tuscan, and certain former and current Company officers and directors have also been named as defendants in litigation filed in the Court of Chancery captioned Denish Bhavsar v. Stephen Vogel, et al., Case No. 2024-0137-PAF (Del. Ch.) (filed Feb. 14, 2024). The plaintiff purports to assert derivative claims on behalf of the Company. The complaint alleges that the individual defendants breached their fiduciary duties in connection with Tuscan’s acquisition of Microvast, Inc., including by making inadequate disclosures concerning Microvast, Inc.’s earnings and alleged conflicts of interest that existed between certain directors and Company stockholders. Certain defendants filed motions to dismiss, which are fully briefed.

The Company, and certain former and current Company officers and directors have also been named as defendants in a litigation filed in the Court of Chancery captioned Henry Park v. Yang Wu, et al., C.A. No. 2024-0868-PAF (Del. Ch.) (filed August 19, 2024). The plaintiff purports to assert derivative claims on behalf of the Company. The complaint alleges that certain individual defendants breached their fiduciary duties in connection with Tuscan’s acquisition of Microvast, Inc., including by making inadequate disclosures concerning Microvast, Inc.’s earnings and by refusing to investigate a litigation demand. On October 14, 2024, the Company and other defendants filed a motion to dismiss. That motion has been fully briefed.

Following an April 7, 2026 telephonic status conference on the Bhavsar and Park cases, the parties agreed to stay the cases pending disposition of the Jacob litigation. Stipulations were filed and so-ordered by the court in Bhavsar on April 24, 2026 and in Park on April 27, 2026. Since that time, the parties have engaged in discussions in an attempt to resolve these matters along with the Jacob litigation.

Certain former and current Company officers and directors have also been named as defendants in a litigation filed in the Court of Chancery captioned Levitan v. Wu, et al., C.A. No. 2026- 1073-PAF (Del. Ch.) (filed August 17, 2026). The Company is named as a nominal defendant in the litigation. The plaintiff purports to assert derivative claims on behalf of the Company. The complaint alleges that certain individual defendants breached their fiduciary duties by making allegedly false statements regarding the construction and development of the Company’s facilities in Huzhou, China and Clarksville, Tennessee, as well as allegedly false statements regarding a Department of Energy grant for which the Company applied. All defendants, including the Company as the nominal defendant, filed motions to dismiss on September 28, 2026. The court has not yet set a briefing schedule on the motions.

The Company has received additional demands from purported Company stockholders, requesting that the Company’s Board of Directors investigate whether current and former directors and officers of the Company and its predecessors, Tuscan and Microvast Inc., breached their fiduciary duties by allegedly making material misrepresentations about inter alia (1) Microvast Inc.’s performance and financial health in connection with the merger between Tuscan and Microvast, Inc., and (2) the Company’s loss of a conditional grant from the United States Department of Energy. The Company has responded to the demands. The Company has also received and responded to stockholder demands for books and records made pursuant to Section 220 of the Delaware General Corporation Law that purportedly seek to investigate the (i) loss of the DOE grant, and (ii) Company's bases for denying one of the referenced stockholder demands.

Securities Litigation

The Company and certain of its officers have also been named as defendants in a putative class action complaint by a stockholder of the Company in the U.S. District Court for the Southern District of Texas under the caption Schelling v. Microvast Holdings, Inc., Case No. 4:23-cv-04565 (S.D. Tex.) (filed Dec. 5, 2023) (the “Schelling Action”). The complaint alleges that defendants violated certain federal securities laws by making misleading statements regarding the receipt of a conditional grant from the United States Department of Energy, the Company’s profitability, the nature of Company-associated operations in China, and the status and progress of the construction of a facility owned by the Company. On August 4, 2026, the Court entered an order granting the parties’ stipulation and joint motion to stay proceedings in the case pending a scheduled mediation. Following the mediation, the parties reached an agreement in principle to settle the case for approximately $16.5 million, subject to the execution of definitive settlement documents and approval by the Court. The parties are currently drafting settlement documents for submission to the Court. Under the Company’s insurance policy, the Company’s total responsibility for the litigation is capped at $10.0 million, representing its self-insured retention (“SIR”), and the remaining is covered by insurance and will be paid by insurance directly to an escrow agent. As of September 30, 2026, the Company had paid $4.9 million toward its SIR and accrued the remaining $5.1 million as liabilities. The net charge of $5.1 million was recorded in general and administrative expenses on the consolidated statements of operations. There can be no assurance that the Court will approve the proposed settlement or that the settlement will be consummated on the terms described or at all.

The Company and certain of its officers and directors have also been named as defendants inthree derivative actions filed in the Southern District of Texas under the captions Bhavsar v. Wu et al., No. 4:24-cv-00372 (S.D. Tex.) (filed Jan. 31, 2024), Marti et al v. Wu et al, Case No. 4:24-cv-00633 (S.D. Tex.) (filed Feb. 23, 2024), Gidaro v. Wu et al, Case No. 4:24-cv-00828 (S.D. Tex.) (filed Mar. 6, 2024). The complaints allege that the officer and director defendants violated the federal securities laws by making inadequate disclosures substantially similar to those alleged in the Schelling Action. The complaints further allege that these inadequate disclosures resulted from, and constituted, breaches of the officer and director defendants’ fiduciary duties. On February 24, 2024, the court entered an order in the first-filed case, Bhavsar v. Wu et al., No. 4:24-cv-00372, consolidating the Bhavsar case and Marti et al v. Wu et al, Case No. 4:24-cv-00633. The consolidated derivative litigation (the “Consolidated Derivative Action”) is captioned In re Microvast Holdings, Inc. Derivative Litigation, Lead Case No. 4:24-cv-00372 (S.D. Tex.). The parties in the Gidaro action filed a stipulation to consolidate the Gidaro case into the Consolidated Derivative Action. The Consolidated Derivative Action is currently stayed.

A fourth derivative complaint was filed on November 19, 2025 in the United States District Court (S.D. Tex) under the caption Richard Swenson and Lori Swenson v. Yang Wu, et al., No. 4:25-cv-05561. Following entry of a stipulation to consolidate the Swenson action with already-pending cases, the Swenson case was voluntarily dismissed on January 27, 2026.

The Company and certain of its current and former officers have also been named as defendants in a putative class action complaint by a stockholder of the Company in the U.S. District Court for the Southern District of Texas under the caption Leah Graham v. Microvast Holdings, Inc., et al., Case No. 4:26-cv-05804 (S.D. Tex) (filed July 21, 2026) (the "Graham Action"). In addition to the Company, the complaint names Yang Wu, the Company's Founder, Chairman and Chief Executive Officer, and Fariyal Khanbabi, Carl T. (Pat) Schultz and Rodney Worthen, each of whom served as the Company's Chief Financial Officer during all or part of the alleged class period. The complaint alleges that defendants made materially false and misleading statements and failed to disclose material adverse facts regarding the Company's business and operations. The plaintiff seeks certification of the purported class, unspecified compensatory damages, prejudgment and post-judgment interest, attorneys' fees, expert fees and other costs, and such other relief as the court may deem just and proper and has demanded a trial by jury. The Graham Action is in its preliminary stages; no lead plaintiff has been appointed, no consolidated or amended complaint has been filed, and the Company has not yet responded to the complaint. The Company intends to defend the matter vigorously.

On August 24, 2026, a purported stockholder of the Company filed a shareholder derivative complaint, purportedly on behalf of the Company, in the U.S. District Court for the Southern District of Texas under the caption Irving v. Wu, et al., Case No. 4:26-cv-06994 (S.D. Tex.) (the "Irving Action"). On October 30, 2026, two other purported stockholders filed a second shareholder derivative complaint, purportedly on behalf of the Company, in the same court under the caption Pixley, et al. v. Wu, et al., Case No. 4:26-cv-09548 (S.D. Tex.) (the "Pixley Action" and, together with the Irving Action, the "Derivative Actions"). The Derivative Actions name the Company as a nominal defendant. They also name as defendants Mr. Wu, Ms. Khanbabi, Mr. Schultz and Mr. Worthen, and the four other members of the Company's Board of Directors (together, the "Individual Defendants"). The Derivative Actions are based on allegations substantially similar to those in the Graham Action. They assert claims against the Individual Defendants for breach of fiduciary duty, unjust enrichment, waste of corporate assets and gross mismanagement, and against the director defendants for violations of Section 14(a) of the Securities Exchange Act of 1934 (the "Exchange Act"). The Irving Action also asserts claims for abuse of control and for contribution under Sections 10(b) and 21D of the Exchange Act. The plaintiffs seek, among other things, unspecified damages on behalf of the Company, restitution and disgorgement from the Individual Defendants, corporate governance reforms, and attorneys' fees and costs, and the Pixley plaintiffs have demanded a trial by jury. The Derivative Actions are in their preliminary stages; the cases have not yet been consolidated, and the Company has not yet responded to the complaints. The Company intends to defend the matters vigorously.

Pursuant to the Company's governing documents and indemnification agreements entered into by the Company with certain of the named defendants, in the above-described actions, the Company has indemnified those defendants for all expenses and losses related to the litigation subject to the terms of those indemnification agreements. While the lawsuits are 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.

Other Matters

Microvast, Inc. was named as a defendant in an action filed in Montgomery County Chancery Court for the State of Tennessee under the caption Virginia Transformer Corp. v. Microvast, Inc. and the Industrial Development Board of the County of Montgomery, Tennessee, Case No. RE-24-32 (Tenn. Ch.) (filed on July 01, 2024) brought by a prime contractor on the Microvast Facility in Tennessee for lien enforcement of $1.8 million. The parties entered into a settlement agreement, but after defendant made one settlement payment, a dispute arose when a third party hacked plaintiff’s email system and directed defendant to wire settlement payments to a fictitious bank account. Plaintiff amended its complaint to add a claim for breach of the settlement agreement, and defendant amended its answer to assert a counterclaim for plaintiff's breach of the settlement agreement. Defendant also filed a motion to compel arbitration of the entire matter based on an arbitration provision in the parties' underlying contract, which the trial court denied. Defendant has appealed the trial court’s order denying arbitration, resulting in a stay of the trial court proceedings pending the appeal. Appellate briefing is complete, oral arguments occurred August 18, 2026, and a decision from the court is pending.

Microvast, Inc. has initiated a lawsuit as a plaintiff in an action filed in the 11th Judicial District Court, Harris County, Texas under the caption Microvast, Inc. v. Grupo Basan Barba Santana, S.A. De C.V., Cause No. 2025-11326 (filed on February 19, 2025). Microvast claims it is entitled to the $2.6 million balance of its $3.5 million deposit. Grupo Basan has counterclaimed for $2.4 million in additional compensation for products and for expenses, which claims Microvast contends are prohibited by the contract. Microvast filed a summary judgment motion to dispose of Grupo Basan's claims. On July 27, 2026, the Court granted Microvast's summary judgment motion, fully dismissing Grupo Basan's counterclaims with prejudice. On November 2, 2026, the Court also granted summary judgment in Microvast’s favor on its breach of contract claim against Grupo Basan. The Court found Microvast entitled to $2.6 million in actual damages in addition to pre- and post-judgment interest, court costs, and attorney's fees. The only remaining issue to resolve is the reasonable and necessary amount of Microvast’s attorney’s fees, which will be resolved at trial set for April 2027.

On November 14, 2024, Microvast Energy, Inc. was named as a defendant in breach of contract action filed before the American Arbitration Association (“AAA”) under the caption Clenera Battery Holdco LLC v. Microvast, Inc.., Case No. 01-24-0008-7288. Clenera asserted a claim for breach of a supply agreement between Microvast and Clenera for custom-made battery containers. Clenera alleges that Microvast must refund approximately $36.0 million due to Microvast's failure to deliver the containers by the contractual deadline, per the terms of the supply agreement. Clenera also seeks interest and attorneys’ fees. On November 15, 2024, Clenera filed an action for the same claim against Microvast

Holdings, Inc. in the Supreme Court of the State of New York, County of New York, under the caption Clenera Battery Holdco LLC v. Microvast Holdings, Inc., Index No. 659103/2024. The guaranty action was consolidated into the arbitration. On December 3, 2025, the AAA issued the final award to Clenera of approximately $42.9 million, plus 9% interest for any amounts unsatisfied after December 3, 2025. This award was amended on January 6, 2026 and January 16, 2026. On February 12, 2026, the parties entered into a confidential settlement agreement. The Company made the payments under the agreement. On July 22, 2026, the NY state guaranty action was dismissed with prejudice.

MPS initiated a lawsuit as plaintiff against Dongguan Winnerway Automobile Co., Ltd. (“Winnerway”) on June 20, 2022, asserting claims for breach of a sales contract and seeking (i) release from its warranty obligations, (ii) reimbursement of approximately $2.1 million (RMB 14 million) in battery costs advanced by MPS under a 50/50 battery replacement arrangement, and (iii) a $1.5 million (RMB 10 million) penalty under the arrangement, plus legal and preservation costs, in the aggregate amount of approximately $3.6 million. Winnerway filed a counterclaim against MPS seeking replacement of the battery packs at issue with new battery packs of the same standard, termination of the Battery After-Sales Service Agreement relating to discontinued vehicles operated by the Dongguan public transportation company and battery repair costs. Winnerway subsequently applied to the Huzhou Intermediate People’s Court to amend its counterclaim, increasing the aggregate amount sought to RMB 293.6 million (approximately $44 million) and seeking compensation for battery procurement costs, stoppage losses, a vehicle refund, battery repair and replacement costs, interest, legal costs and a penalty. The claim and the counterclaim have been heard together and remain under trial, with ruling on both the claim and the counterclaim pending. The initial judicial appraisal in the matter was terminated, a new appraisal agency has been appointed and the appraisal procedure has recommenced. MPS is represented by external counsel in the matter. MPS intends to pursue its claims and defend the counterclaim vigorously. The outcome of the matter is inherently uncertain, and there is always the possibility that the court rules in a manner adverse to the interests of the Company. Based on the information currently available, the Company is unable to determine the probability of an outcome favorable to MPS, and no reasonable estimate of a possible loss or range of loss can be made at this time. Accordingly, no liability has been accrued in respect of this matter as of September 30, 2026.

MPS was namedas a defendant in a lawsuit filed by Guangdong Lyric Robot Automation Co., Ltd. (“Lyric”) on February 7, 2026, alleging breach of a purchase contract and seeking (i) that MPS take delivery of the equipment that was the subject matter of the contract and (ii) compensation of approximately $3.9 million (RMB 26.3 million), together with the late-payment penalties, storage fees and legal fees. MPS contends that Lyric failed to perform its supply, installation and commissioning obligations under the contract and that the equipment at issue required modification. Following a hearing on June 23, 2026, the court ruled in favor of Lyric and directed MPS to pay Lyric approximately $1.6 million (RMB 10.5 million) and take delivery of the equipment. MPS has appealed the ruling and the appeal hearing is scheduled for November 11, 2026. On May 11, 2026, MPS filed a separate action against Lyric seeking rescission of the contract and supplemental agreement, compensation of approximately $19.4 million (RMB 129.2 million), including refund of the amount paid, interest, and loss of profit. In June 2026, the court issued a procedural ruling finding that the separate action constituted duplicative litigation and transferred the remaining claims to a lower court. The lower court has not yet accepted the case, and the parties are awaiting a hearing. MPS is represented by external counsel in both matters. MPS intends to pursue its claims and defend against Lyric’s claims vigorously. The outcome of these matters is inherently uncertain, and there is always the possibility that a court rules in a manner adverse to the interests of the Company. Based on the information currently available, the Company is unable to determine the probability of an outcome favorable to MPS, and no liability has been accrued in respect of these matters as of September 30, 2026.

On April 5, 2024, Shanghai Motor Vehicle Inspection Certification & Tech Innovation Center Co., Ltd. Jiangsu Branch (“Shanghai Motor Vehicle”) filed a product-liability lawsuit against five defendants, including MPS, alleging that battery thermal runaway constituted a product quality defect that caused an accidental fire and resulted in damages. Shanghai Motor Vehicle sought a total of approximately$1.74 million (RMB 11.75 million), which should be borne jointly by the five defendants. The initial action was withdrawn on December 30, 2025, and Shanghai Motor Vehicle re-filed on January 5, 2026. On September 15, 2026, the Court selected an appraisal institution and commenced the appraisal process. Based on the information currently available, the Company is unable to determine the probability of an outcome favorable to MPS, and no reasonable estimate of a possible loss or range of loss can be made at this time. Accordingly, no liability has been accrued in respect of this matter as of September 30, 2026.

The Company is also involved in other litigation, claims, and proceedings. The Company 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 Company 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. Except for the accrual recorded in connection with the proposed settlement of the Schelling Action described above, as of September 30, 2026 and December 31, 2025, based on the information currently available, the Company believes that any loss contingencies that may arise as a result of currently pending legal proceedings cannot be accurately quantified at this time and thus cannot determine whether they will have a material adverse effect on the Company’s business, results of operations, financial condition, and cash flows.

Tariffs

In February 2026, the United States Supreme Court ruled that certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were not authorized by statute. Following the ruling, the U.S. Court of International Trade ordered U.S. Customs and Border Protection to suspend collection of such tariffs and to establish a process to refund amounts previously collected. As a result of this ruling, the Company has sought to receive refunds of tariffs previously paid on qualifying imports. During the nine months ended September 30, 2026, the Company received a $4.4 million refund, excluding interest, and issued $2.7 million in tariff refunds to a customer. The IEEPA tariff refunds received were recognized as a reduction to the cost of revenue, while the refund issued to the customer was recognized as a reduction of revenue for the nine months ended September 30, 2026.

Capital Commitments

Capital commitments for construction of property and purchase of property, plant and equipment were $6.5 million as of September 30, 2026.

Purchase Commitments

Purchase commitments for non-cancelable contractual obligations primarily related to purchases of inventory were $34.7 million as of September 30, 2026.

Pledged Assets

Other than those disclosed in Note 6 - Bank Borrowings, the Company may pledge certain assets to banks to secure the issuance of bank acceptance notes for the Company. As of September 30, 2026, certain of the Company's machinery and equipment with a carrying value of $11.9 million has been pledged to secure the issuance of such notes.

Liens

As of September 30, 2026, the Company had $1.8 million of liens, a decrease of $21.8 million from December 31, 2025 due in part to the settlement of the DPR Litigation.

NOTE 17. SEGMENT INFORMATION

The Company’s business includes the design, development, manufacturing, sales and leasing of battery components and systems primarily for electric commercial vehicles and energy storage systems. Revenue, classified by major geographic region in which the customers are located, is disclosed in Note 12. The Chief Executive Officer (“CEO”), as the chief operating decision maker (“CODM”), organizes the Company as a single operating and reportable segment. The CODM uses operating income to allocate operating and capital resources and assesses performance by comparing actual operating income results to historical results and previously forecasted financial information. The measure of operating income is reported on the consolidated statements of operations as operating income. The segment assets are reported on the consolidated balance sheets as total assets.

Long-lived assets, classified by major geographic regions, are as follows (in thousands, except percentages):