Microvast Holdings Inc

Previous wording

Microvast Holdings, Inc., an advanced battery technology company, is headquartered in Stafford, Texas, and publicly traded on the NASDAQ. We specialize in the design, development, and manufacturing of high-performance lithium-ion battery systems and components, primarily for electric commercial vehicles ('EVs') and utility-scale energy storage systems ('ESS'). Since our inception in 2006, our mission has been to drive the transition to clean energy by accelerating the adoption of electric vehicles and renewable energy solutions through innovative battery technology.

Current wording

Microvast Holdings, Inc. is an advanced battery technology company, headquartered in Stafford, Texas, and publicly traded on the NASDAQ under the ticker symbol MVST. We specialize in the design, development, and manufacturing of battery components and systems primarily for electric commercial vehicles and utility-scale energy storage systems ("ESS").

Previous wording

In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Going Concern, we evaluate whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about our ability to continue as a going concern. This evaluation includes considerations related to our liquidity resource. Given the uncertainties around our liquidity as described in Note 2 to the unaudited condensed consolidated financial statements of this Quarterly Report and in this Management's Discussion and Analysis of Financial Condition and Results of Operations, we have concluded that there is substantial doubt about our ability to continue as a going concern for at least one year from the date of issuance of the unaudited consolidated financial statements included elsewhere in this Quarterly Report. For more information, see Note 2 to the unaudited consolidated financial statements of this Quarterly Report and the risk factors in our Annual Report on Form 10-K for the year ended December 31, 2023 "There is substantial doubt regarding our ability to continue as a going concern", "We may be unable to meet our current capital requirements and will require additional capital to meet our outstanding accounts payable and current liabilities".

Current wording

For additional detail, refer to Note 2 - Significant Accounting Policies to the unaudited condensed consolidated financial statements included in this Quarterly Report and to the Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2024.

Previous wording

We believe that our future success will be dependent on several factors, including those discussed below. While these areas represent opportunities for us, they also represent challenges and risks that we must successfully address in order to continue the growth of our business and improve our results of operations.

Current wording

Our future success depends on several critical factors, including those outlined below. While these represent opportunities for growth, they also pose challenges and risks that we must effectively manage to sustain our business momentum and improve financial performance.

Previous wording

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 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.

Current wording

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.

Previous wording

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 Inflation Reduction Act in the U.S. and the E.U. Green Deal, E.U. Fit for 55). While governmental economic incentives and mandates can drive market demand for the markets in which we operate and, as a result, battery systems and components, governmental economic incentives can always be gradually reduced or eliminated. Any reduction or elimination of governmental economic incentives may result in reduced demand for our products and adversely affect our financial performance.

Current wording

Our revenue and profitability depend substantially on the demand for battery systems and battery components, which is driven by the growth of the commercial and passenger electric vehicle and energy storage markets. Many factors contribute to the development of the electric vehicle and battery energy storage sector, including product innovation, general economic and political conditions, environmental concerns, energy demand, government support and economic incentives (e.g., the IRA in the U.S. and the E.U. Green Deal, E.U. Fit for 55). While governmental economic incentives and mandates can drive market demand for the markets in which we operate and, as a result, battery systems and components, governmental economic incentives can always be gradually reduced or eliminated. Any reduction or elimination of governmental economic incentives may result in reduced demand for our products and adversely affect our financial performance.

Previous wording

Our growth depends on being able to meet anticipated demand for our products. As of September 30, 2024, we had a backlog of approximately $277.7 million for our electric vehicles battery systems, equivalent to approximately 1,144.1 MWh. To increase our manufacturing output, address our backlog and capture growing market opportunities, we have made significant investment in capacity expansions in both Huzhou, China and Tennessee, United States.

Current wording

Our growth depends on being able to meet anticipated demand for our products. As of March 31, 2025, we had a backlog of approximately $350.5 million for our electric vehicles battery systems, equivalent to approximately 1,606.5 MWh. To increase our manufacturing output, address our backlog and capture growing market opportunities, we have made significant investment in capacity expansions in both Huzhou, China and Tennessee, United States.

Previous wording

In the third quarter of 2023, we successfully completed the 2 GWh cell, module and tray capacity expansion for our 53.5Ah cell technology in Huzhou, China which is now in operation and generating revenue from sales of electric battery systems.

Current wording

In the third quarter of 2023, we successfully completed the 2 GWh cell, module and tray capacity expansion for our 53.5Ah cell technology in Huzhou, China. The demand for our 53.5Ah cell technology from our commercial vehicle customer base will be primarily met from this facility.

Previous wording

We derive revenue from the sales of our electric battery products, including LpTO, LpCO, MpCO, HpCO and HnCo battery power systems. While we have historically marketed and sold our products primarily in China and the wider Asia-Pacific region, While we have historically marketed and sold our products primarily in China and the broader Asia-Pacific region, we are also expanding our international sales presence, with notable revenue growth in the EMEA (Europe, Middle East, and Africa) region. This expansion reflects increasing demand and positive growth trends in EMEA as we continue to broaden our global market reach. The following table sets forth a breakdown of our revenue by major geographic regions in which our customers are located, for the periods indicated:

Current wording

We derive revenue from the sales of our electric battery products, including LpTO, LpCO, MpCO, HpCO and HnCo battery power systems. While our sales have historically been concentrated in China and the broader Asia-Pacific region, we are actively expanding our international presence to capture growing demand in key global markets. The following table sets forth a breakdown of our revenue by major geographic regions, based on the locations of our customers, for the periods indicated:

Previous wording

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

Current wording

Our operating expenses consist of selling and marketing (S&M), general and administrative (G&A), and research and development (R&D) expenses.

Previous wording

Selling and marketing expenses. Selling and marketing expenses consist primarily of personnel-related costs associated with our sales and marketing functions, including share-based compensation, and other expenses related to advertising and promotions of our products. We intend to hire additional sales personnel, initiate additional marketing programs and build additional relationships with our customers. Accordingly, we expect that our selling and marketing expenses will continue to increase in absolute dollars in the long term as we expand our business.

Current wording

Selling and marketing expenses. Selling and marketing expenses include personnel-related costs for our sales and marketing teams, including salaries, stock-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, selling and marketing expenses are expected to increase in absolute dollar terms over the long term.

Previous wording

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

Current wording

Other income and expenses consist primarily of fair value changes of warrant liability and convertible loan, interest expense associated with our debt financing arrangements, interest income earned on our cash balances and gain on debt restructuring.

Previous wording

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

Current wording

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

Previous wording

Income tax in the PRC is generally calculated at 25% of the estimated assessable profit of our subsidiaries in the PRC, except that two of our PRC subsidiaries were qualified as “High and New Tech Enterprises” and thus enjoyed a preferential income tax rate of 15%. Federal corporate income tax rate of 21% is applied for our U.S. entity. Income tax in the UK is calculated at an average tax rate of 19% of the estimated assessable profit of our subsidiary in the UK. German enterprise income tax, which is a combination of corporate income tax and trade tax, is calculated at 29.9% of the estimated assessable profit of our subsidiary in Germany.

Current wording

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

Previous wording

Our revenues increased from approximately $80.1 million for the three months ended September 30, 2023 to approximately $101.4 million for the same period in 2024, primarily driven by an increase in sales volume from approximately 319.2 MWh for three months ended September 30, 2023 to approximately 434.0 MWh for the same period in 2024.

Current wording

Our revenues increased from approximately $81.4 million for the three months ended March 31, 2024 to approximately $116.5 million for the same period in 2025, primarily driven by an increase in sales volume from approximately 353.3 MWh for the three months ended March 31, 2024 to approximately 535.7 MWh for the same period in 2025.

Previous wording

Our cost of revenues for the nine months ended September 30, 2024 increased by $20.5 million, or 12.2%, compared to the same period in 2023. The increase in the cost of revenues was primarily in line with the increased sales, partially offset by $1.2 million of decreased share-based compensation expenses.

Current wording

Our cost of revenues for the three months ended March 31, 2025 increased by $9.3 million, or 14.6%, compared to the same period in 2024. The increase in the cost of revenues was primarily driven by an increase in sales volumes, and was partially offset by $1.1 million of decreased share-based compensation expenses.

Previous wording

Selling and Marketing expenses for the nine months ended September 30, 2024 decreased by $1.3 million or 7.9% compared to the same period in 2023. The decrease in Selling and Marketing expense was primarily due to $1.6 million of decreased share-based compensation expenses.

Current wording

Selling and Marketing expenses for the three months ended March 31, 2025 increased $1.2 million or 21.6% compared to the same period in 2024. The increase in Selling and Marketing expense was primarily due to continued investments in customer engagement and market expansion initiatives, which was partially offset by $0.7 million of decreased share-based compensation expenses.

Previous wording

General and Administrative expenses for the three months ended September 30, 2024 decreased $13.1 million or 52.6% compared to the same period in 2023. The decrease in General and Administrative expenses was primarily due to $7.1 million of decreased share-based compensation expenses and the expenditure control in the U.S. since May 2024.

Current wording

General and Administrative expenses for the three months ended March 31, 2025 decreased $13.3 million or 56.1% compared to the same period in 2024. The decrease in General and Administrative expenses was primarily due to $7.7 million of decreased share-based compensation expenses and $4.7 million attributed to positive foreign exchange changes due to fluctuations in the Euro exchange rate.

Previous wording

Research and Development expenses for the three months ended September 30, 2024 decreased $2.5 million or 19.3% compared to the same period in 2023. The decrease in Research and Development expenses was primarily due to $1.3 million of decreased share-based compensation expenses and the expenditure control in the U.S. since May 2024.

Current wording

Research and Development expenses for the three months ended March 31, 2025 decreased $3.2 million or 28.2% compared to the same period in 2024. The decrease in Research and Development expenses was primarily due to $1.6 million of decreased share-based compensation expenses and the reductions of U.S. headcount in Q2 2024.

Previous wording

For the three months period ended September 30, 2024, we recorded a gain of $2.8 million mainly due to the change in fair value of convertible loan with shareholder of $2.8 million, details please see Note 14 – Convertible loan with shareholder measured at fair value.

Current wording

For the three months period ended March 31, 2025, we recorded a gain of $43.2 million mainly due to the change in fair value of the Convertible Loan of $42.9 million, details please see Note 14 – Convertible loan measured at fair value.

Previous wording

The consolidated net cash position as of September 30, 2024 included cash and cash equivalents of $29.6 million and $19.3 million held by our PRC and European subsidiaries, respectively, that is not available to fund our U.S. operations unless funds are repatriated. Should we need to repatriate to the U.S. part or all of the funds held by our international subsidiaries in the form of a dividend, we would need to accrue and pay withholding taxes. We do not intend to pay any cash dividends on our common stock in the foreseeable future and intend to retain all of the available funds and any future earnings for use in the operation and expansion of our business in the PRC, Europe and the U.S.

Current wording

The consolidated net cash position as of March 31, 2025 included cash and cash equivalents of $64.4 million and $9.6 million held by our Chinese and European subsidiaries, respectively, that is not available to fund our U.S. operations unless funds are repatriated. Should we need to repatriate to the U.S. part or all of the funds held by our international subsidiaries in the form of a dividend, we would need to accrue and pay withholding taxes. We do not intend to pay any cash dividends on our common stock in the foreseeable future and intend to retain all of the available funds and any future earnings for use in the operation and expansion of our business in China, Europe and the U.S.

Previous wording

In accordance with Accounting Standards Update ("ASU") No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40),” management has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date of the unaudited condensed consolidated financial statements are issued and has determined that the Company’s ability to continue as a going concern is dependent on its ability to raise additional capital or secure financing. In light of the capital expenditures required to settle the outstanding payables associated with the Group's Tennessee expansion and operating requirements under its current business plan, the Company is projecting that its existing cash and cash equivalents will not be sufficient to fund its operations and capital expenditure needs through the next twelve months from the date of issuance of its unaudited condensed consolidated financial statements. These conditions and events raise substantial doubt about the Company’s ability to continue as a going concern.

Current wording

In accordance with Accounting Standards Update ("ASU") No. 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40),” management has evaluated whether there are conditions and 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 and has determined that our ability to continue as a going concern is dependent on our ability to generate cash from future operations and additional capital. In light of operating requirements under our current business plan, we are projecting that the existing cash and assets available for sale and equity securities will not be sufficient to fund our operations through the next twelve months. These conditions and events raise substantial doubt about the our ability to continue as a going concern.

Previous wording

Management has secured a $29,911 bank loan in the third quarter of 2024, with an additional $9,962 received in October 2024. Further details can be found in Note 7- Bank Borrowings. Workforce reductions were made in the U.S. during the second and third quarters of 2024, delivering cost savings and enhanced cash flow. Further plans to alleviate the conditions that raise substantial doubt include:

Current wording

To enhance liquidity, we secured a $28.2 million bank loan in the first quarter of 2025, with an additional $1.4 million received in April and early May 2025. Further details can be found in Note 7- Bank Borrowings. Workforce reductions were made in the U.S. during the second and third quarters of 2024, delivering cost savings and enhanced cash flow.

Previous wording

Asset Sales: The Group is actively pursuing the sale of non-core U.S. real estate assets, with an expectation of increasing liquidity without affecting core operations.

Current wording

Further strategies to strengthen liquidity include optimizing operations, asset sales, and evaluating funding options. The Company achieved income and generated positive cash flow from operations in the first quarter of 2025, and continued execution of its business strategy is expected to support positive cash flow generation over the next twelve months. Additionally, the Group is actively pursuing the sale of non-core U.S. real estate assets, which is expected to enhance liquidity without affecting core operations.

Previous wording

As of September 30, 2024, we had bank borrowings of $119.6 million, the terms of which range from 1 to 27 months. The interest rates on our bank borrowings ranged from 3.30% to 4.85% per annum. As of September 30, 2024, we had convertible bonds outstanding of $43.2 million, with interest rates ranging from 3% to 4%. The convertible bonds are all due in 2027. As of September 30, 2024, we also had the Convertible loan with shareholder of $24.4 million outstanding at an initial interest rate equal to Term SOFR for the applicable interest period, plus an initial applicable margin of 9.75% per annum, 3.75% of which shall be paid in kind and added to the outstanding principal under the Convertible loan with shareholder, with the remaining interest to be paid in cash. See Note 14 for details. As of September 30, 2024, we were in compliance with all material terms and covenants of our loan agreements, credit agreements and bonds.

Current wording

As of March 31, 2025, we had bank borrowings of $127.5 million, the terms of which range from 0.5 to 21 months. The interest rates on our bank borrowings ranged from 2.90% to 4.85% per annum. As of March 31, 2025, we had convertible bonds outstanding of $41.7 million, with interest rates ranging from 3% to 4%. The convertible bonds are all due in 2027. As of March 31, 2025, we also had the Convertible Loan of $61.0 million outstanding at an initial interest rate equal to Term SOFR for the applicable interest period, plus an initial applicable margin of 9.75% per annum, 3.75% of which shall be paid in kind and added to the outstanding principal under the Convertible Loan, with the remaining interest to be paid in cash. See Note 14 - Convertible loan measured at fair value for details. As of March 31, 2025, we were in compliance with all material terms and covenants of our loan agreements, credit agreements and bonds.

Previous wording

On July 23, 2021, we received $708.4 million from the completion of the Business Combination, $705.1 million net of transaction costs paid by Microvast, Inc. We have used $469.3 million of the net proceeds from the Business Combination to expand our manufacturing facilities and for the purchase of property and equipment associated with our existing manufacturing and R&D facilities. In addition, $181.3 million of the net proceeds were used for working capital as of September 30, 2024.

Current wording

On July 23, 2021, we received $708.4 million from the completion of the Business Combination, $705.1 million net of transaction costs paid by Microvast, Inc. We have used $482.0 million of the net proceeds from the Business Combination to expand our manufacturing facilities and for the purchase of property and equipment associated with our existing manufacturing and R&D facilities. In addition, $212.5 million of the net proceeds were used for working capital as of March 31, 2025.

Previous wording

Our capital expenditures amounted to $150.9 million and $186.8 million for the years ended December 31, 2022 and 2023, respectively. Our capital expenditures in 2022 and 2023 related primarily to the construction of manufacturing facilities in Huzhou, China and Clarksville, Tennessee. The Huzhou, China expansion was completed in the third quarter of 2023.

Current wording

Our capital expenditures amounted to $6.6 million and $10.2 million for the three months ended March 31, 2025 and 2024, respectively. Our capital expenditures in 2025 and 2024 related primarily to the construction of manufacturing facilities under our Clarksville expansion and Huzhou, China.

Previous wording

Because of delays in securing additional financing, including our fund-raising process being negatively impacted by the loss of the DOE grant, in the fourth quarter of 2023 we experienced slow progress in continuing construction of our Clarksville, Tennessee expansion, slowing down certain project work streams due to the need for additional financing. This resulted in further delays and increased costs with negative effects on our liquidity and ability to meet accounts payable, especially for our U.S. operations. The Tennessee expansion was originally scheduled to be completed in the fourth quarter of 2023 and was intended for production of 53.5Ah cells for our ESS solutions. However, we now believe LFP cells are a better battery fit for our ESS solutions and intend to produce LFP cells from the Tennessee facility instead of 53.5Ah cells. In order to complete the Tennessee expansion, we need to secure financing to meet the remaining capital expenditure needs, and the timing of when this project will be in operation remains uncertain. We are in the process of evaluating the amount of capital expenditures needed to complete the Tennessee expansion in light of the intended production shift from NMC cells to LFP cells.

Current wording

Because of delays in securing additional financing, in the fourth quarter of 2023 we began experiencing slow progress in continuing construction of our Clarksville expansion, slowing down certain construction work streams due to the need for additional financing. This facility was initially intended to produce 53.5Ah cells for our ESS solutions; however, we believe that LFP cells are better suited for our ESS solutions and intend to utilize the Tennessee facility to produce LFP cells instead of 53.5Ah cells. Additionally, our ESS products that were previously developed and assembled in Colorado are now planned to be assembled at our Tennessee facility once the facility is completed. The proceeds from the Business Combination alone were not sufficient to complete the Clarksville expansion and meet our general working capital needs and due to foreign restrictions and adverse tax consequences as well as the working capital needs of Microvast Power Systems Co. Ltd., we are unable to repatriate cash from China to pay our accounts payable in the U.S. and fund the continued expansion of our U.S. operations. We are seeking alternative sources of capital. Until financing is in place, this will limit our growth opportunities, especially in the U.S. market where our customers desire products that meet their domestic content requirements. We are seeking to secure financing to complete the Tennessee facility.

Previous wording

Our future capital requirements will depend on many factors, including, but not limited to funding planned production capacity expansions and for general working capital. In addition, we may in the future enter into arrangements to acquire or invest in complementary businesses or technologies. We may need to seek additional equity or debt financing in order to meet these future capital requirements. If we are unable to raise additional capital or secure financing when desired, or on terms that are acceptable to us, our business, financial condition and results of operations could be adversely affected. There are no material off-balance sheet arrangements other than those described below.

Current wording

Our future capital requirements will depend on many factors, including, but not limited to funding planned production capacity expansions and for general working capital. In addition, we may in the future enter into arrangements to acquire or invest in complementary businesses or technologies. We may need to seek additional equity or debt financing in order to meet these future capital requirements. If we are unable to raise additional capital when desired, or on terms that are acceptable to us, our business, financial condition and results of operations could be adversely affected. There are no material off-balance sheet arrangements other than those described below.

Previous wording

We regularly enter into non-cancelable contractual obligations primarily related to purchases of inventory. As of September 30, 2024, such purchase commitments, which do not qualify for recognition on our Unaudited Condensed Consolidated Balance Sheets, amount to $52.3 million , most of which is short-term.

Current wording

We regularly enter into non-cancelable contractual obligations primarily related to purchases of inventory. As of March 31, 2025, such purchase commitments, which do not qualify for recognition on our unaudited condensed consolidated balance sheets, amount to $62.1 million, most of which is short-term.

Previous wording

There have not been any other material changes during the three and nine months ended September 30, 2024 to our contractual obligations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Current wording

There have not been any other material changes during the three months ended March 31, 2025 to our contractual obligations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

Previous wording

During the nine months ended September 30, 2024, our operating activities used $3.3 million in cash. This decrease in cash consisted of (1) a net loss of $90.0 million and non-cash charges of $135.2 million, of which $22.4 million is depreciation of property, plant and equipment, $30.3 million is non-cash share-based compensation expense and $64.9 million is impairment loss from long-lived asset; and (2) a $48.5 million decrease in cash flows from operating assets and liabilities including $27.3 million cash inflow due to the net decrease of accounts receivable and notes receivable, $4.1 million increase in inventories, $54.7 million cash outflow from accounts payable and notes payable, $30.8 million cash outflow from accrued and other liabilities and prepaid expense and other current asset, and $13.8 million cash inflow from other operating assets and liabilities.

Current wording

During the three months ended March 31, 2025, our operating activities generated $7.2 million in cash. This increase in cash consisted of (1) a net profit of $61.8 million and non-cash charges of $(27.7) million, of which $(43.2) million is due to change in the fair value of warrant and Convertible Loan, $8.0 million is depreciation of property, plant and equipment, $4.8 million is non-cash product warranty and $0.7 million is non-cash share-based compensation expense; and (2) a $26.9 million decrease in cash flows from operating assets and liabilities including $19.4 million cash outflow due to the net increase of accounts receivable and notes receivable, $12.7 million cash outflow from accounts payable and notes payable, $9.2 million cash outflow from accrued and other liabilities and prepaid expense and other current asset, $15.8 million cash inflow due to decrease in inventories, and $1.4 million cash outflow from other operating assets and liabilities.

Previous wording

During the nine months ended September 30, 2024, cash used in investing activities totaled $12.0 million. This cash outflow primarily consisted of capital expenditures related to the expansion of our manufacturing facilities and to the purchase of property and equipment associated with our existing manufacturing and R&D facilities.

Current wording

During the three months ended March 31, 2025, cash used in investing activities totaled $2.3 million. This decrease cash outflow primarily consisted of capital expenditures related to the expansion of our manufacturing facilities and to the purchase of property and equipment associated with our existing manufacturing and R&D facilities.

Previous wording

During the nine months ended September 30, 2024, cash generated from financing activities totaled $46.6 million. This cash inflow was a result of $70.4 million proceeds from bank borrowings and $25.0 million proceeds from Convertible loan offset by $31.9 million repayment on bank borrowings and $0.5 million of debt cost for Convertible loan, $16.4 million of deferred payment related to purchases of property, plant and equipment.

Current wording

During the three months ended March 31, 2025, cash generated from financing activities totaled $9.5 million. This cash inflow was a result of $28.2 million of proceeds from bank borrowings offset by $13.0 million of repayment on bank borrowings, $1.4 million of repayment on long-term bonds payable and $4.3 million of deferred payments related to purchases of property, plant and equipment.

Previous wording

There have been no substantial changes to these estimates, or the policies related to them during the nine months ended September 30, 2024, except for the impairment of long-lived assets illustrated in below paragraphs. For other discussion of these estimates and policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023.

Current wording

There have been no substantial changes to these estimates, or the policies related to them during the three months ended March 31, 2025. For a full discussion of these estimates and policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.