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(1) See Note 16 – Commitments and Contingencies.

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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 technologies 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 six months ended June 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. In the second quarter and first half of 2026, the Company changed the presentation of foreign currency transaction gains and losses previously presented as general and administrative expenses to be presented as foreign exchange (loss) gain, which did not change net income 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 June 30, 2026, the Company had stockholders' equity of $543.1 million, including an accumulated deficit of $1,086.0 million, cash and cash equivalents of $127.8 million, restricted cash of $15.3 million and other current assets of $231.8 million. Net cash used in operating activities was $33.3 million for the six months ended June 30, 2026, a decrease of $77.6 million compared to $44.3 million generated by operating activities in the same period in 2025. As of June 30, 2026, the Company had outstanding borrowings of $118.6 million, with $104.2 million due within the next 12 months, a bond payable of $41.7 million that matures in January 2027 and other current liabilities of $197.9 million. Additionally, as of June 30, 2026, the Company had $37.5 million in purchase commitments primarily related to inventory, and $13.2 million in capital commitments with $10.7 million due within the next 12 months.

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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, its projected cash flow may not be sufficient to fund operations and meet debt obligations over the next twelve months. Additionally, recent equity market conditions and business performance have rendered the 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 operating cost reduction initiatives and reducing or deferring certain discretionary capital expenditures;

•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 $69.4 million from bank borrowing during the six months ended June 30, 2026, of which $48.2 million represented refinanced debt. The Company anticipates that it will continue to be able to refinance the maturing short-term bank borrowing for the next twelve months. As of June 30, 2026, the Company was in compliance with all material terms and covenants under its loan agreements, credit agreements, and bonds.

•Evaluating additional financing alternatives, including potential capital raising transactions and strategic opportunities.

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 the financial statements are issued, and (2) when implemented, the plans will mitigate the conditions and events that raise substantial doubt. Certain elements of the plans have not been fully implemented and are dependent upon factors outside the Company’s control, and therefore cannot be deemed probable. As a result, substantial doubt about the Company’s ability to continue as a going concern has not been alleviated. There can be no assurance 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 borrowings, 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 would be materially and adversely impacted, and the Company may be required to significantly reduce, restructure, or cease operations.

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.

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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 plan 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.

Accounts receivable consisted of the following (in thousands):

			June 30, 2026						December 31, 2025
Accounts receivable			$	125,311					$	160,456
Allowance for credit losses			(4,130)						(4,693)
Accounts receivable, net			$	121,181					$	155,763

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Balance at beginning of the period			$	4,028					$	6,523					$	4,693					$	5,090
(Reversal) provision of credit loss expenses			(74)						833						(873)						2,191
Write off			—						(1,129)						—						(1,129)
Recoveries of credit losses			124						55						211						55
Exchange difference			52						124						99						199
Balance at end of the period			$	4,130					$	6,406					$	4,130					$	6,406

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Inventories consisted of the following (in thousands):

			June 30, 2026						December 31, 2025
Work in process			$	56,310					$	41,757
Raw materials			19,390						20,055
Finished goods			17,894						27,599
Total			$	93,594					$	89,411

The Company wrote-down inventories to net realizable value and incurred losses of $161 thousand and $1.7 million on battery inventory for the three and six months ended June 30, 2026, and nil for the three and six months ended June 30, 2025, respectively. The write-downs were primarily related to technology development or product upgrade.

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

			June 30, 2026						December 31, 2025
Advance from customer (1)			$	20,865					$	35,865
Payables for purchase of property, plant and equipment			37,231						30,182
Other current liabilities			12,085						9,934
Product warranty, current			10,149						10,357
Accrued expenses			14,521						15,632
Accrued payroll and welfare			7,208						9,460
Tax payable			8,403						8,953
Operating lease liabilities, current			3,485						2,788
Interest payable			870						258
Total			$	114,817					$	123,429

(1) See Note 16 – Commitments and Contingencies.

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Balance at beginning of the period			$	40,218					$	34,661					$	38,969					$	33,107
Provided during the period			3,565						3,687						5,982						8,512
Utilized during the period			(3,071)						(2,669)						(4,557)						(6,299)
Exchange difference			456						1,055						774						1,414
Balance at end of the period			$	41,168					$	36,734					$	41,168					$	36,734

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			June 30, 2026						December 31, 2025
Product warranty – current			$	10,149					$	10,357
Product warranty – non-current			31,019						28,612
Total			$	41,168					$	38,969

On September 27, 2022, Microvast Power Systems Co., Ltd. (“MPS”), one of the Company’s subsidiaries, entered into a $111.5 million (RMB800 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. The 2022 Facility Agreement contains certain customary restrictive covenants, including but not limited to disposal of assets and dividend distribution without the consent of the lender, and certain customary events of default.

As of June 30, 2026, MPS had outstanding borrowings of $22.1 million under the 2022 Facility Agreement with the following repayment schedule:

Repayment Date						Repayment Amount
December 10, 2026						$22.1 million (RMB149.9 million)

Capitalized interest, which was recorded in construction in progress, was $108 thousand and $246 thousand for the three months ended June 30, 2026 and 2025, respectively, and $270 thousand and $524 thousand for the six months ended June 30, 2026 and 2025, respectively.

MPS entered into two long-term working capital loan agreements with a Chinese bank in June 2025 and March 2026 and borrowed a total $29.5 million or RMB200 million (RMB100 million per each agreement). The term of these loans is two years with interest rates ranging from 2.70% to 2.80% per annum. The interest expense the three months ended June 30, 2026 and 2025 was $204 thousand and nil, respectively, and $301 thousand and nil for the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, MPS had outstanding borrowings of $28.7 million (RMB195 million) under these agreements with the following repayment schedule:

Repayment Date						Repayment Amount
September 18, 2026						$147 thousand (RMB1.0 million)
December 19, 2026						$368 thousand (RMB2.5 million)
March 18, 2027						$147 thousand (RMB1.0 million)
June 19, 2027						$13.6 million (RMB92.5 million)
September 18, 2027						$147 thousand (RMB1.0 million)
March 18, 2028						$14.3 million (RMB97.0 million)

The Company's PRC subsidiaries have also entered into short-term loan agreements and bank facilities with certain banks in China. 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 $498 thousand and $471 thousand for the three months ended June 30, 2026 and 2025, respectively, and $926 thousand and $861 thousand for the six months ended June 30, 2026 and 2025, respectively.

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Beginning balance			$	138,769					$	127,543					$	106,279					$	111,728
Proceeds from bank borrowings			17,635						31,384						69,356						59,571
Repayments of principal			(40,025)						(43,122)						(60,829)						(56,184)
Exchange difference			2,243						1,542						3,816						2,232
Ending balance			$	118,622					$	117,347					$	118,622					$	117,347

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 June 30, 2026 and December 31, 2025 is as follows (in thousands):

			June 30, 2026						December 31, 2025
Buildings			$	118,103					$	117,855
Machinery and equipment			53,369						54,975
Land use rights			11,771						11,570
Total			$	183,243					$	184,400

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

			June 30, 2026						December 31, 2025
Product warranty			$	31,019					$	28,612
Deferred subsidy income			5,797						6,190
Other payable			98						2,396
Total			$	36,914					$	37,198

Bonds payable consisted of the following (in thousands):

			June 30, 2026						December 31, 2025
Huzhou Saiyuan			$	41,693					$	41,693
Total			$	41,693					$	41,693

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 (RMB600 million). The Company pledged its 12.39% equity holding over MPS to Huzhou Saiyuan to facilitate the issuance of these convertible bonds.

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If the subscribed bonds are not repaid by the maturity date, Huzhou Saiyuan has the right to dispose of the equity interests pledged by the Company in proportion to the amount of matured bonds, or convert the bonds into equity interests of MPS within 60 days after the maturity date. If Huzhou Saiyuan decides to convert the bonds into equity interests of MPS, the equity interests pledged would be released and the convertible bonds would be converted into equity interest of MPS based on an entity value of MPS of $950.0 million.

In September 2020 and 2022, MPS entered into two supplemental agreements with Huzhou Saiyuan, respectively, to change the repayment schedule as follows: (i) $14.6 million (RMB100 million) was repaid, together with interest accrued, on or before November 10, 2022, (ii) $14.6 million (RMB100 million) was repaid, together with interest accrued, on or before December 31, 2022 and (iii) the remaining $43.9 million (RMB300 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 (RMB5 million) repaid in 2023 and $1.4 million (RMB10 million) repaid in 2025, the subscription and outstanding balance of the convertible bonds was $41.7 million (RMB285 million) as of June 30, 2026.

The Company has 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 entitle the holder to purchase one share of the Company’s common stock at an exercise price of $11.50 per share. During the three and six months ended June 30, 2026, a gain of nil and $15 thousands, respectively, were recognized due to the changes of the fair value of the Warrants. As of June 30, 2026, the fair value of the Warrants was nil. The Warrants 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 initial 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.

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.

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As of June 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):

			Fair Value Measurement as of June 30, 2026
			Quoted Prices in Active Market for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
Cash and cash equivalents			$	127,828					—						—						$	127,828
Restricted cash			15,257						—						—						15,257
Total financial asset			$	143,085					—						—						$	143,085
Warrant liability			$	—					—						—						$	—
Total financial liability			$	—					—						—						$	—

			Fair Value Measurement as of December 31, 2025
			Quoted Prices in Active Market for Identical Assets (Level 1)						Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)						Total
Cash and cash equivalents			$	104,963					—						—						$	104,963
Restricted cash			64,275						—						—						64,275
Total financial asset			$	169,238					—						—						$	169,238
Warrant liability			$	—					—						15						$	15
Convertible loan measured at fair value			—						—						140,929						140,929
Total financial liability			$	—					—						140,944						$	140,944

The following is a reconciliation of the beginning and ending balances for Level 3 warrant liability during the six months ended June 30, 2026 and 2025 (in thousands):

			Six Months Ended June 30,
			2026						2025
Balance at beginning of the period			$	15					$	290
Changes in fair value			(15)						144
Balance at end of the period			$	—					$	434

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

			Six Months Ended June 30,
			2026						2025
Balance at beginning of the period			$	140,929					$	104,613
Conversion of outstanding convertible loan into common stock			(80,000)						—
Interest paid during the period			(2,943)						(1,355)
Changes in fair value			(57,986)						78,217
Balance at end of the period			$	—					$	181,475

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 June 30, 2026 and 2025 was $887 thousand and $844 thousand, and for the six months ended June 30, 2026 and 2025 was $1.8 million and $1.7 million, respectively, which excluded cost of short-term contracts. Short-term lease cost for the three months ended June 30, 2026 and 2025 was $13 thousand and $45 thousand, and for the six months ended June 30, 2026 and 2025 was $29 thousand and $91 thousand, respectively.

As of June 30, 2026, the Company had operating lease liabilities of $17.5 million, including current portion of $3.5 million, which is presented under accrued expenses and other current liabilities on the consolidated balance sheet. The weighted average remaining lease term was 8.0 years and weighted average discount rate was 5.0%.

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

			Six Months Ended June 30, 2026
Cash payments for operating leases			$	1,603
Right-of-use assets obtained in exchange for new operating lease liabilities			2,117

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

			As of June 30, 2026
Six-month period ending December 31, 2026			$	2,517
2027			3,807
2028			2,168
2029			1,778
2030			1,768
2031			1,768
Thereafter			7,221
Total future lease payments			$	21,027
Discount to present value			$	(3,546)
Present value of operating lease liabilities			$	17,481

Lessor Accounting

The Company recognized sales-type lease revenue of $314 thousand and $264 thousand respectively, for the three months ended June 30, 2026 and 2025 and $360 thousand and $4.4 million respectively, for the six months ended June 30, 2026 and 2025. The sales-type lease revenue is included in revenue in the accompanying consolidated statements of operations. As of June 30, 2026, the Company recorded net investment in sales-type leases of $5.6 million including current portion in the amount of $4.2 million, which is presented in accounts receivable on the consolidated balance sheets.

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

Geographic regions						Three Months Ended June 30,
						2026												2025
						Amount						%						Amount						%
China						$	33,332					38		%				$	34,843					38		%
Other Asia & Pacific countries						3,274						3		%				12,815						14		%
Asia & Pacific						36,606						41		%				47,658						52		%
Italy						39,807						46		%				16,088						18		%
France						11,817						14		%				9,339						10		%
Other European countries						765						1		%				13,458						15		%
Europe						52,389						61		%				38,885						43		%
United States (1)						(1,733)						(2)		%				4,796						5		%
Total						$	87,262					100		%				$	91,339					100		%

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Geographic regions						Six Months Ended June 30,
						2026												2025
						Amount						%						Amount						%
China						$	48,209					33		%				$	78,969					38		%
Other Asia & Pacific countries						5,539						3		%				18,740						9		%
Asia & Pacific						53,748						36		%				97,709						47		%
Italy						71,120						48		%				52,675						25		%
France						23,497						16		%				27,702						13		%
Other European countries						1,008						1		%				18,558						10		%
Europe						95,625						65		%				98,935						48		%
United States (1)						(1,499)						(1)		%				11,186						5		%
Total						$	147,874					100		%				$	207,830					100		%

(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 three and six months ended June 30, 2026. Before the revenue reduction, a total of $931 thousand and $1.2 million revenue, respectively, was realized in the United States for the three months and six months ended June 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):

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Balance at beginning of the period			$	6,663					$	44,204					$	5,605					$	43,678
Cash received			4,151						2,291						7,939						5,916
Revenue recognized			(5,924)						(5,032)						(8,732)						(8,195)
Exchange difference			101						79						179						143
Balance at end of the period			$	4,991					$	41,542					$	4,991					$	41,542

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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 June 30, 2026, the Company had approximately 2.1 million shares of service-based Restricted Stock and approximately 134 thousand shares of performance-based Restricted Stock outstanding. The Company also had approximately 24.9 million stock options outstanding, of which 23.4 million stock options were exercisable as of June 30, 2026.

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Cost of revenues			$	31					$	62					$	72					$	124
General and administrative expenses			703						566						1,526						1,003
Research and development expenses			78						156						184						306
Selling and marketing expenses			30						62						68						116
Total			$	842					$	846					$	1,850					$	1,549

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 to two 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 is 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.

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During the three months ended June 30, 2026 and 2025, a loss of $5.8 million and $121.2 million were recognized, respectively. During the six months ended June 30, 2026 and 2025, a gain of $58.0 million and a loss of $78.2 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 June 30, 2026, 5.5 million warrants remained outstanding.

The following table sets forth the computation of basic and diluted net (loss) profit per share for the periods indicated (in thousands, except per share data):

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Net (loss) profit - basic			$	(11,988)					$	(106,058)					$	36,223					$	(44,268)
Changes in fair value of convertible loan			—						—						(57,986)						—
Net (loss) profit - diluted			$	(11,988)					$	(106,058)					$	(21,763)					$	(44,268)
Weighted average common stock used in computing basic net (loss) profit per share			348,949						323,643						340,726						323,538
Weighted-average effect of dilutive securities:
Diluted effect of shares issuable upon conversion of convertible loan			—						—						42,222						—
Weighted average common stock used in computing diluted net (loss) profit per share			348,949						323,643						382,948						323,538
Net (loss) profit per share - basic			$	(0.03)					$	(0.33)					$	0.11					$	(0.14)
Net (loss) profit per share - diluted			$	(0.03)					$	(0.33)					$	(0.06)					$	(0.14)

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

			Three Months Ended June 30,												Six Months Ended June 30,
			2026						2025						2026						2025
Shares issuable upon exercise of stock options			16						29,113						227						30,039
Shares issuable upon vesting of non-vested shares			499						3,633						975						3,601
Shares issuable upon exercise of warrants			—						33,937						—						33,937
Shares issuable that may be subject to cancellation			—						1,688						—						1,688
Shares issuable upon conversion of convertible loan			34,615						50,000						—						50,000

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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 December 13, 2023, in response to a stockholder litigation demand, the Company filed a petition in the Court of Chancery pursuant to Section 205 of the Delaware General Corporation Law seeking validation of an amendment to the Company’s Amended Certificate of Incorporation, the Business Combination and the issuance of the shares issued pursuant thereto, and the Company’s Second Amended and Restated Certificate of Incorporation adopted in connection with the Business Combination (collectively, the “Acts”) to resolve any uncertainty with respect to those matters, which action was captioned In re Microvast Holdings Inc., C.A. No. 2023-1245-PAF. On March 18, 2024, the Court of Chancery granted the petition, validating and declaring effective each Act as of the time and date such Act was originally taken.

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.

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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 22, 2025, the Court granted in part and denied in part Defendant's motion to dismiss. The lawsuit is currently in the discovery phase. The trial of the case is currently set to begin on November 8, 2027.

The Company and certain of its officers and directors have also been named as defendants in three 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 in 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 Gidardo action filed a stipulation to consolidate the Gidaro case into the Consolidated Derivative Action. The Consolidated Derivative Action is currently stayed. The allegations in the Consolidated Derivative Action are substantially similar to the allegations raised in the Securities Class Action. On March 18, 2024, the parties in the Derivative Action filed a joint motion to stay the proceedings pending a ruling in the Securities Class Action on the anticipated motion to dismiss. The Court granted the motion to stay on March 24, 2024. As of August 10, 2026, the stay remained in effect.

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.

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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

Deidra Milan is an ex-employee of Microvast, and is the putative representative of a class of more than 100 individual employees who were let go from their jobs at a plant in Clarksville, Tennessee. She has filed Civil Action No. 3:24-cv-00627, Deidra Milan, Plaintiff v. Microvast, Inc. and Microvast Holdings, Inc. in the U.S. District Court for the Middle District of Tennessee. The Company filed an answer to the suit on July 19, 2024. The class action complaint is brought under the Worker Adjustment and Notification Act, 29 U.S.C. §§2101-2109 (the “WARN Act”), which requires advance notice before certain types of plant closings and mass layoffs. Plaintiff alleges that defendants failed to give proper advance notice of a mass layoff in violation of the WARN Act. Plaintiffs sought backpay, medical expenses, attorney’s fees and statutory penalties in an unspecified amount. Class counsel and the Company agreed on the terms of a class action settlement agreement. The Court held a hearing on Plaintiff's unopposed motion for final approval for May 21, 2026, and the settlement was approved. As such, the case has been dismissed with prejudice.

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 and oral arguments are scheduled for mid-August. The parties entered into mediation discussions on May 19, 2026.

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 motion, fully dismissing Grupo Basan's claims with prejudice. On July 31, 2026, Microvast filed a second summary judgment motion asking the Court to grant a $2.6 million judgment in Microvast's favor. Grupo Basan's attorneys have withdrawn. It is unknown at this time whether Grupo Basan will retain new counsel. Discovery has concluded, and trial is set for September 2026. Microvast has moved for a short trial continuance to allow the Court to hear and rule on its pending summary judgment motion, which would fully resolve the lawsuit's remaining claims before trial.

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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 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.

Microvast Power Systems Co., Ltd. (“MPS”), the Company’s operating subsidiary in Huzhou, China, 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 payment of outstanding amounts owed for battery products delivered to Winnerway, in the aggregate amount of approximately $3.62 million. Winnerway has 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, in the aggregate amount of approximately $22.35 million. The claim and the counterclaim have been heard together and remain under trial, with judgment on both the claim and the counterclaim pending. 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 June 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. As of June 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. In May 2026, the Company received a $4.3 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 three and six months ended June 30, 2026.

Capital Commitments

Capital commitments for construction of property and purchase of property, plant and equipment were $13.2 million as of June 30, 2026.

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Purchase Commitments

Purchase commitments for non-cancelable contractual obligations primarily related to purchases of inventory were $37.5 million as of June 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 June 30, 2026, certain of the Company's machinery and equipment with a carrying value of $19.8 million has been pledged to secure the issuance of such notes.

Liens

As of June 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.

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):

Geographic regions						June 30, 2026												December 31, 2025
						Amount						%						Amount						%
China						$	351,479					65		%				$	345,148					66		%
Asia & Pacific						351,479						65		%				345,148						66		%
Germany						14,064						3		%				15,291						3		%
United Kingdom						14						—		%				20						—		%
Europe						14,078						3		%				15,311						3		%
United States						172,264						32		%				159,168						31		%
Total						$	537,821					100		%				$	519,627					100		%

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On December 12, 2025, Yang Wu, the Company's Chief Executive Officer, adopted a 10b5-1 trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The 10b5-1 trading plan provides for the sale of an aggregate of up to 10,000,000 shares of the Company's common stock between April 1, 2026 and March 31, 2027.

On June 11, 2025, Yixin Pan, director and Chair of the Compensation Committee and Nominating & Governance Committee, adopted a 10b5-1 trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Exchange Act. The 10b5-1 trading plan provides for the sale of an aggregate of up to 12,596 shares of the Company's common stock between December 31, 2025 and January 6, 2026.

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