Microvast Holdings, Inc.

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.

Risks related to our liquidity and indebtedness

Our history of operating losses and negative cash flows from operations has raised substantial doubt about our ability to continue as a going concern.

We have expressed substantial doubt about our ability to continue as a going concern due to a significant decline in revenue and gross margin during the third quarter of 2026, a substantial operating loss, and continued use of cash in operating activities. In addition, we had limited working capital and significant current debt obligations, including obligations that require refinancing or repayment during the assessment period. Based on our current cash flow forecasts, absent additional financing, the refinancing, extension or restructuring of our debt obligations, or significant further reductions in costs, we expect our available cash to be insufficient to meet our obligations as they come due over the next twelve months. Our unaudited consolidated financial statements for the nine months ended September 30, 2026 have been prepared assuming we 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, we 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, we 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.

As of October 31, 2026, our total usable cash across all of our entities was approximately $71.3 million, and our current accounts payable substantially exceed our available current assets in each of our principal operating regions. Based on our current forecasts, absent additional financing, the refinancing or extension of our debt obligations, or further cost reductions, we expect our available cash to be insufficient to meet our obligations as they come due over the next twelve months. Cash at our European operations is limited to a minimum safety balance. Our revenue is materially concentrated with a small number of customers, and there is significant uncertainty regarding the level of future orders from certain of our largest customers. In addition, we currently have limited visibility into cash collections in the near term, and our first quarter has historically reflected nominal reductions in activity related to the Chinese New Year holiday. As a result, we do not expect to be able to fund our near-term debt and settlement obligations from operating cash flows. If MPS is unable to settle its debts as and when they fall due, MPS may become subject to a bankruptcy or liquidation proceeding under the Enterprise Bankruptcy Law of the PRC. See Liquidity and Capital Resources above.

Our ability to continue operating as a going concern depends on, among other things, our ability to refinance or extend maturing borrowings, our ability to obtain additional financing, our ability to generate sufficient revenue and cash flows from operations, the rate of revenue growth, and our ability to manage operating expenses. Factors that could further adversely impact our future revenue and cash generation include, but are not limited to, reduced customer demand, declining sales volume, rising material costs, supply chain disruptions, increased competition, adverse macroeconomic conditions and the loss of key customer relationships. If we are not successful in maintaining demand for our products, or if operating conditions further constrain our cash generation, we may experience additional adverse impacts to revenue, profitability and liquidity. The substantial doubt about our ability to continue as a going concern may adversely affect the price of our common stock, our ability to raise capital or enter into strategic transactions and partnerships and market perception.

In particular, our financial condition may cause customers, suppliers, and other partners to reduce their purchases of our products, demand more favorable payment or contract terms, limit the inventory or orders they are willing to commit to, or cease doing business with us altogether. Any such actions could further reduce our revenue, disrupt operations and materially and adversely affect our liquidity and results of operations.

Additional financing may not be available on acceptable terms, or at all, and we may be required to significantly reduce, restructure or cease operations or pursue alternatives including proceedings under the U.S. Bankruptcy Code, and our stockholders could lose all or a substantial part of their investment.

The financing alternatives that remain potentially available to us are limited and are expected to be short-term in nature or subject to significant restrictions, such as short-term accounts receivable financing, and will not be sufficient to address our liquidity needs. Our current indebtedness and the restrictive covenants in our loan agreements further limit the types and terms of additional financing available to us. We may not be able to timely secure additional financing on favorable terms, or at all, due to, among other things, our history of operating losses and negative cash flows, the substantial doubt about our ability to continue as a going concern, general macroeconomic conditions, market volatility and the terms of our existing indebtedness.

If we are unable to obtain adequate financing in the near term, or to refinance, extend or restructure our maturing debt obligations, we expect our available cash to be insufficient to meet our obligations as they come due over the next twelve months. Without additional sources of financing, our ability to continue as a going concern will be materially and adversely impacted, and we will be required to significantly reduce, restructure or cease our operations or to pursue other alternatives, including, but not limited to, commencing a case under the U.S. Bankruptcy Code or seeking relief under other applicable reorganization laws. Any such outcome would have a material adverse effect on holders of our common stock, who would likely lose all or substantially all of their investment.

Any strategic alternative we pursue, including any restructuring transaction, is likely to be highly dilutive to, or eliminate the value of, our existing common stock, and holders of our common stock may receive little or no recovery. In addition, any such transaction could result in the cancellation or discharge of a portion of our indebtedness, which could give rise to taxable cancellation of indebtedness income or, if that income is excluded from taxable income (including in a case under the Bankruptcy Code or to the extent we are insolvent), a reduction in our net operating loss carryforwards and other tax attributes. Any such transaction could also result in an ownership change under Section 382 of the Internal Revenue Code and materially limit our ability to use any remaining net operating loss carryforwards and other tax attributes.

If we file to commence remedies under applicable restructuring or reorganization laws, our operations and ability to develop and execute our business plan, and our ability to continue as a going concern, are subject to the risks and uncertainties associated with bankruptcy. As such, remedies under applicable restructuring or reorganization laws are likely to have a material adverse effect on our business, financial condition, results of operations and liquidity. During any such cases, our senior management would be required to spend a significant amount of time and effort attending to the restructuring of the business instead of focusing exclusively on our business operations. Bankruptcy Court protection also might make it more difficult to retain management and other employees necessary to the success and growth of our business.

We are subject to multiple pending legal proceedings, including securities class actions and derivative claims, and adverse outcomes, settlements or the costs of defense could materially reduce our limited liquidity, impair our ability to continue as a going concern and cause our stockholders to lose all or a substantial part of their investment.

We are currently a defendant in several legal proceedings, including the Schelling Action, in which the parties have reached an agreement in principle to settle that remains subject to definitive documentation and Court approval (See Note 16 – Commitments and Contingencies), and we expect to remain subject to litigation, claims and other proceedings that are costly and disruptive. If the proposed settlement of the Schelling Action is not approved or consummated, or if our insurers do not fund their share of the settlement amount, we could incur losses in excess of the amount accrued. An adverse judgment, arbitral award or settlement in any current or future proceeding could exceed our available cash and our insurance coverage. Not all litigation expenses are covered by insurance, our coverage is likely insufficient to cover all pending claims, subject to exclusions or retentions, or unavailable for certain claims. Any such judgment, award or settlement could also require us to divert funds needed for operations, debt service and capital expenditures. It could also result in liens on or attachment of our assets.

Our financial condition makes us particularly vulnerable to these risks. There is substantial doubt about our ability to continue as a going concern, and we have significant near-term debt maturities, including short-term bank borrowings and bonds payable. We have limited ability to obtain additional financing on acceptable terms, or at all. Pending litigation, particularly securities class actions alleging misleading statements, may also harm our reputation. It may impair our relationships with customers, suppliers, lenders and potential investors, and make it more difficult to raise capital or complete a refinancing or other strategic transaction. It may also divert substantial management time and attention from operating our business during a critical period. Adverse publicity may result regardless of whether the allegations are valid or whether we are ultimately found not liable. If any of these risks materialize, our business, financial condition, results of operations and cash flows would be materially and adversely affected, cause declines in the trading price of our common stock and could cause our stockholders to lose all or a substantial part of their investment.

Our substantial indebtedness and debt service obligations has adversely affected our competitiveness, our liquidity, our operations and our ability to obtain additional financing.

As of September 30, 2026, our bank borrowings were $135.3 million, our bonds payable were $41.7 million and $120.8 million of our borrowings were due within the next 12 months. Our bonds payable consist of convertible bonds issued by our Chinese subsidiary to a Chinese governmental entity, and the entire outstanding $41.7 million balance is repayable, together with accrued interest, on or before January 31, 2027. We pledged our 12.39% equity holding in our Chinese subsidiary to the lender to facilitate the issuance of these bonds, and the applicable interest rate increases to 12% if we default in repaying the bonds when due. Our total current liabilities included other current liabilities of $193.4 million. We also had outstanding purchase commitments of $34.7 million and capital commitments of $6.5 million, of which $5.6 million were due within 12 months. During the nine months ended September 30, 2026, we secured $95.8 million of bank borrowings, of which $59.8 million represented refinanced debt.

It cannot be deemed probable that we will be able to repay our indebtedness when due, or that we will be able to refinance our indebtedness, in whole or in part, on acceptable terms, or at all. Our high level of indebtedness and corresponding cash debt service obligations could, among other things:

•heighten our vulnerability to downturns in our business, adverse general economic conditions, and competitive pressures in the battery technology market;

•require us to dedicate a larger portion of our cash flow from operations to interest and principal payments on near-term maturities, limiting the availability of cash for other purposes;

•expose us to the loss of a portion of our equity interest in our principal operating subsidiary in China, or to dilution of that interest, if we fail to repay the bonds at maturity and the bondholder elects to dispose of the pledged equity interests or to convert the bonds into equity interests of our Chinese subsidiary;

•limit our ability to invest in our business and future business opportunities, including the completion of the Clarksville expansion;

•limit our ability to refinance our indebtedness, particularly given our going-concern qualification and negative operating cash flows;

•increase our cost of borrowing;

•place us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged; and

•impair our ability to obtain additional financing for working capital, capital expenditures, debt repayments or general corporate purposes.

Our ability to meet our cash requirements, including our debt service obligations, is dependent upon our ability to maintain and improve our operating performance, which is subject to general economic and competitive conditions and to financial, business and other factors, many of which are beyond our control. Our existing liquidity and capital resources are not sufficient to sustain our business and service our debt obligations, and we could face liquidity constraints that materially and adversely affect our business, results of operations and financial condition.

Our plans to mitigate the substantial doubt may not be effectively implemented, and cost-reduction and restructuring actions may themselves strain near-term liquidity.

In response to the substantial doubt about our ability to continue as a going concern, management has developed plans intended to improve our liquidity position, including:

•Implementing a focused commercial recovery plan to rebuild order intake and revenue visibility;

•Establishing an integrated sales-and-operations plan linking confirmed demand to production schedules, material purchases, labor, capacity utilization, and cash requirements;

•Negotiating extensions or restructurings of debt obligations within our China operating entities;

•Pursuing refinancing of short-term bank borrowings as they mature;

•Evaluating other financing alternatives. Financing sources available to us 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.

Certain elements of these plans have not been fully implemented and depend on factors outside our control, including the willingness of lenders to agree to extensions or restructurings, the availability of financing on acceptable terms and the successful execution of cost-reduction initiatives. Management has concluded that these plans cannot be deemed probable of being effectively implemented and, accordingly, substantial doubt about our ability to continue as a going concern has not been alleviated. The cash costs associated with restructuring actions, including severance payments, may further strain our near-term liquidity and could accelerate the timing of a covenant breach or the need for additional financing. The initiatives described above may not produce the expected benefits or be sufficient to allow us to maintain liquidity and operations in the ordinary course.

Our business will be materially and adversely affected if MPS, our PRC subsidiary, declares bankruptcy or becomes subject to a dissolution or liquidation proceeding.

The Enterprise Bankruptcy Law of the PRC (the “Bankruptcy Law”), came into effect on June 1, 2007. The Bankruptcy Law provides that an enterprise will be liquidated if the enterprise fails to settle its debts as and when they fall due and if the enterprise’s assets are, or are demonstrably, insufficient to clear such debts.

Our PRC subsidiary holds certain assets that are important to our business operations. If our PRC subsidiary undergoes a voluntary or involuntary liquidation proceeding, unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering our ability to operate our business, which could materially and adversely affect our business, financial condition and results of operations.

According to the PRC’s State Administration of Foreign Exchange’s (“SAFE”) Notice of the State Administration of Foreign Exchange on Further Improving and Adjusting Foreign Exchange Administration Policies for Direct Investment, effective on December 17, 2012, and the Provisions for Administration of Foreign Exchange Relating to Inbound Direct Investment by Foreign Investors, effective May 13, 2013, if our PRC subsidiary undergoes a voluntary or involuntary liquidation proceeding, prior approval from the SAFE for remittance of foreign exchange to our shareholders abroad is no longer required, but we still need to conduct a registration process with the SAFE local branch. It is not clear whether “registration” is a mere formality or involves the kind of substantive review process undertaken by SAFE and its relevant branches in the past.

The substantial doubt about our ability to continue as a going concern may adversely affect our relationships with customers, suppliers and partners, our ability to attract and retain qualified personnel and our ability to raise capital or enter into strategic transactions.

The substantial doubt about our ability to continue as a going concern, and any public disclosure thereof, may adversely affect the willingness of customers, suppliers, and partners to do business with us. In particular, our financial condition may cause customers and partners to reduce their purchases of our products, demand more favorable payment or contract terms, seek alternative suppliers or cease doing business with us altogether. Our revenue is materially concentrated with a small number of customers, there is significant uncertainty regarding the level of future orders from certain of our largest customers, and one of our significant European customers was recently acquired by a third party, which creates additional uncertainty regarding its future purchases from us. Suppliers may tighten credit terms, require prepayment or cash-on-delivery, reduce allocation of components or decline to extend trade credit.

In addition, the substantial doubt may make it more difficult for us to attract and retain qualified personnel, as current and prospective employees may seek employment with companies perceived to be more financially stable. The loss of key personnel in engineering, manufacturing, sales, or management could disrupt operations and impair our ability to execute on our business strategy. The substantial doubt has also impaired, and may continue to impair our ability to raise capital, enter into strategic transactions or partnerships or negotiate with counterparties on favorable terms. Any of these effects could reduce revenue, increase costs, disrupt operations or further adversely affect our liquidity, financial condition and results of operations.

Restrictive covenants, the need for waivers or amendments, cross-default provisions, and acceleration of our indebtedness could adversely affect our liquidity.

Our loan agreements, credit agreements, and bonds payable contain restrictive covenants and customary events of default that may limit our operational and financial flexibility. As of September 30, 2026, the Company was in compliance with all material terms and covenants under its loan agreements, credit agreements, and bonds. However, such compliance does not alleviate the substantial doubt about our ability to continue as a going concern. Our projected cash flows are not expected to be sufficient to meet our debt obligations over the next twelve months, and our ability to satisfy the $120.8 million of near-term maturities depends on the continued refinancing or extension of maturing borrowings. Such refinancing or extension depends on negotiations with lenders and other factors outside our control, and while negotiation remain ongoing with our lenders regarding the refinancing or extension of our debt obligations, there can be no assurance that such negotiations will be successful. In addition, although MPS had approximately $22.4 million of nominal availability under its working capital credit lines as of October 31, 2026, certain of this availability is subject to pending performance criteria, and in light of MPS’s financial condition and significant unfunded debt maturities, there is a significant risk that our lenders will invoke covenants under these facilities or otherwise freeze, restrict or terminate our ability to draw on them when we need the funds. Accordingly, we cannot rely on this availability as a source of liquidity.

As of September 30, 2026, assets with an aggregate carrying value of $181.6 million were pledged to secure our bank facilities, and $11.9 million of machinery and equipment was separately pledged to secure bank acceptance notes. Outstanding liens totaled $1.8 million.

Our debt arrangements contain cross-default provisions whereby a default under one agreement will result in default under the agreements covering other borrowings. The occurrence of a default under any of our borrowing arrangements would permit our lenders to declare all amounts outstanding under those borrowing arrangements to be immediately due and payable. If our lenders accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets or liquidity to repay those borrowings. In addition, as certain of our assets are pledged as collateral to secure our indebtedness, if we default or declare bankruptcy, after these obligations are met, there may not be sufficient funds or assets to satisfy our subordinate interests, including those of our stockholders, and our stockholders may receive little or no recovery. Future non-compliance with financial covenants may limit our access to existing facilities, require us to seek waivers or amendments that may not be available on acceptable terms or at all or result in an acceleration of debt obligations, any of which would further adversely impact liquidity.

We must be able to restructure or refinance our debt to meet our liquidity requirements.

Our ability to meet our liquidity requirements depends in part on our ability to generate cash from operations, refinance or extend maturing borrowings, and obtain additional capital. As of September 30, 2026, cash held by our Chinese subsidiaries ($30.4 million) and European subsidiaries ($14.4 million) cannot currently be repatriated to fund our U.S. operations or the Clarksville expansion due to foreign regulatory restrictions, adverse tax consequences, and localized working capital needs. As a result, the cash and cash equivalents available to fund our U.S. operations and capital commitments are substantially less than our consolidated cash balance of $84.8 million. As of October 31, 2026, our total usable cash across all of our entities was approximately $71.3 million. We expect our available cash to be insufficient to meet our obligations as they come due over the next twelve months.

If we are unable to generate sufficient operating cash flow or obtain additional financing, we will be forced to sell assets, restructure or refinance our debt or raise additional capital on terms that may be dilutive or otherwise unfavorable. We have previously funded U.S. investment requirements from held-for-sale asset proceeds. We may be unable to take any of these actions on satisfactory terms, in a timely manner, or at all, due to, among other things, our high level of indebtedness, our operating performance, and the restrictions in our existing debt agreements. Any of these actions may not be sufficient to allow us to service our debt obligations or maintain our operations, and our failure to generate sufficient operating cash flow to pay our debt obligations could have a material adverse effect on our business, financial condition and results of operations.

We may not remain in compliance with the continued listing requirements for The Nasdaq Stock Market. If we do not maintain compliance, or regain compliance following any period of non-compliance, our common stock will be delisted, which will affect the market price and liquidity for our common stock and reduce our ability to raise additional capital.

Our common stock is listed on The Nasdaq Capital Market. In order to maintain that listing, we must satisfy Nasdaq’s continued listing requirements, including the requirement to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

Beginning on July 13, 2026, the closing bid price of our common stock has been below $1.00 per share. On August 26, 2026, we received a written notice from Nasdaq notifying that the average closing bid price of our common stock was below the minimum closing bid price of $1 per share during the last 30 consecutive trading days, as required for continued listing on the Nasdaq under the Minimum Bid Price Requirement.

The notice has no immediate impact on the listing of the common stock, which will continue to be listed and trade on Nasdaq subject to the Company’s continued compliance with the other listing requirements of the Rules. The Company’s common stock will have an added indicator on NASDAQ.com indicating that it is currently non-compliant. Pursuant to the Rules, the Company has 180 days, or until February 22, 2027 to cure the deficiency and regain compliance with the minimum closing bid price (subject to additional time periods for which the Company may be eligible). The Company is monitoring the closing bid price for the common stock and exploring available options to regain compliance within the prescribed time period. In light of our current liquidity position and the substantial doubt about our ability to continue as a going concern, there can be no assurance that the closing bid price of our common stock will recover. In addition, if we or MPS become subject to bankruptcy, liquidation or other reorganization proceedings, Nasdaq may determine to delist our common stock regardless of our compliance with the Minimum Bid Price Requirement.

In the event the Company does not evidence compliance with the minimum closing bid price requirement during the 180-day grace period (or any additional time period for which the Company may be eligible), it is expected that Nasdaq would notify the Company that the shares of common stock are subject to delisting. At such time, the Company may appeal such determination to a Nasdaq Hearings Panel (the “Panel”) and it is expected that the Company’s shares of common stock would continue to be listed and available to trade on Nasdaq at least pending the completion of the appeal process. There can be no assurance that any such appeal would be successful or that the Company would be able to evidence compliance with the terms of any extension that may be granted by the Panel. Any non-compliance may be costly, divert management’s time and attention, and could have a material adverse effect on our business, reputation, financing and results of operations. A delisting will substantially decrease trading in our common stock, adversely affect the market liquidity of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws, materially adversely affect our ability to obtain financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. Additionally, the market price of our common stock may decline further and stockholders may lose some or all of their investment.

Declines in our market capitalization or operating performance have resulted in and may result in future material non-cash impairment charges.

As of September 30, 2026, our long-lived assets had a carrying amount of $508.9 million. We assess our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. When a triggering event is identified, we compare the undiscounted estimated future cash flows from the operation and eventual disposition of the asset group to its carrying amount. If the carrying amount exceeds the undiscounted cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset group exceeds its fair value.

During the three months ended September 30, 2026, we recorded a material non-cash $35.7 million impairment loss on long-lived assets, consisting of impairment losses of $15.0 million, $4.4 million and $16.3 million for our operations in China, Germany and the U.S., respectively. The impairment resulted from impairment testing of our production line assets and construction-in-progress assets, which was triggered by the material decline in sales, gross margin and operating performance during the quarter. We also recorded a $5.4 million full valuation allowance to our deferred income tax assets. These charges contributed significantly to our net loss of $76.8 million for the three months ended September 30, 2026. Notwithstanding these charges, our long-lived asset base of $508.9 million remains substantial relative to our market capitalization and recent operating cash flows. Declines in market capitalization, revenue, operating performance or other adverse changes in circumstances, including further deterioration of the business outlook, sustained declines in sales volume or inability to execute on cost-reduction initiatives, may indicate that the carrying amount of our long-lived assets is not recoverable and could result in additional material non-cash impairment charges in future periods, which could have a material adverse effect on our financial condition and results of operations.