Microvast Holdings (2OZA) Risk Analysis
Risk Overview Q2, 2026
Source: the company's latest filing for the period ended Jun 30, 2026, filed Aug 10, 2026
Risk Change Over Time
- Share Price & Shareholder Rights - Risk 1We may not remain in compliance with the continued listing requirements for The Nasdaq Stock Market. If we do not maintain compliance, or regain compliance following any period of non-compliance, our common stock may be delisted, which could affect the market price and liquidity for our common stock and reduce our ability to raise additional capital.
Our common stock is listed on The Nasdaq Capital Market. In order to maintain that listing, we must satisfy Nasdaq's continued listing requirements, including the requirement to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (the "Minimum Bid Price Requirement"). Beginning on July 13, 2026, the closing bid price of our common stock has been below $1.00 per share. We anticipate that, if the closing bid price of the common stock remains below $1.00 per share for 30 consecutive business days, we will receive a noncompliance letter from the Listing Qualifications Staff of the Nasdaq notifying us that we are not in compliance with the Minimum Bid Price Requirement. As of the date of this filing, we have not received any such letter from Nasdaq. We will continue to monitor the closing bid price of our common stock and, if we become non-compliant, will seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance period. Any non-compliance may be costly, divert management's time and attention, and could have a material adverse effect on our business, reputation, financing and results of operations. A delisting could substantially decrease trading in our common stock, adversely affect the market liquidity of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws, materially adversely affect our ability to obtain financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. Additionally, the market price of our common stock may decline further and stockholders may lose some or all of their investment.
- Accounting & Financial Operations - Risk 2Our history of operating losses and negative cash flows from operations has raised substantial doubt about our ability to continue as a going concern.
We have expressed substantial doubt about our ability to continue as a going concern due to our history of operating losses and negative cash flows from operations. Our unaudited consolidated financial statements for the six months ended June 30, 2026 have been prepared assuming we will continue as a going concern, which contemplates the continuity of operations, realization of assets, and the satisfaction of liabilities and commitments in the normal course of business. As of June 30, 2026, we had an accumulated deficit of $1,086.0 million and stockholders' equity of $543.1 million. During the six months ended June 30, 2026, we used $33.3 million of cash in operating activities, an unfavorable change of $77.6 million from $44.3 million generated in the prior-year period, driven in part by a 28.8% decline in revenue and a decrease in gross margin from 36.0% to 30.4%. In addition, as of June 30, 2026, $104.2 million of our $118.6 million of borrowings were due within the next 12 months, and the $41.7 million of bonds payable issued by our Chinese subsidiary to a Chinese governmental entity is repayable on or before January 31, 2027. Our ability to continue operating as a going concern depends on, among other things, our ability to generate sufficient revenue and cash flows from operations, the rate of revenue growth, our ability to manage operating expenses, our ability to refinance or extend maturing borrowings and our ability to obtain additional financing. Factors that could further adversely impact our future revenue and cash generation include, but are not limited to, reduced customer demand, declining sales volume, rising material costs, supply chain disruptions, increased competition, adverse macroeconomic conditions and the loss of key customer relationships. If we are not successful in maintaining demand for our products, or if operating conditions further constrain our cash generation, we may experience additional adverse impacts to revenue, profitability and liquidity. The substantial doubt about our ability to continue as a going concern may adversely affect the price of our common stock, our ability to raise capital or enter into strategic transactions and partnerships and market perception. In particular, our financial condition may cause customers, suppliers, and other partners to reduce their purchases of our products, demand more favorable payment or contract terms, limit the inventory or orders they are willing to commit to, or cease doing business with us altogether. Any such actions could further reduce our revenue, disrupt operations and materially and adversely affect our liquidity and results of operations.
- Debt & Financing - Risk 3Our substantial indebtedness and debt service obligations could adversely affect our competitiveness, our liquidity, our operations and our ability to obtain additional financing.
As of June 30, 2026, our bank borrowings were $118.6 million, our bonds payable were $41.7 million and $104.2 million of our borrowings were due within the next 12 months. Our bonds payable consist of convertible bonds issued by our Chinese subsidiary to a Chinese governmental entity, and the entire outstanding $41.7 million balance is repayable, together with accrued interest, on or before January 31, 2027. We pledged our 12.39% equity holding in our Chinese subsidiary to the lender to facilitate the issuance of these bonds, and the applicable interest rate increases to 12% if we default in repaying the bonds when due. Our total current liabilities included other current liabilities of $197.9 million. We also had outstanding purchase commitments of $37.5 million and capital commitments of $13.2 million, of which $10.7 million were due within 12 months. During the six months ended June 30, 2026, we secured $69.4 million of bank borrowings, of which $48.2 million represented refinanced debt. There can be no assurance that we will be able to repay our indebtedness when due, or that we will be able to refinance our indebtedness, in whole or in part, on acceptable terms, or at all. Our high level of indebtedness and corresponding cash debt service obligations could, among other things: - heighten our vulnerability to downturns in our business, adverse general economic conditions, and competitive pressures in the battery technology market;- require us to dedicate a larger portion of our cash flow from operations to interest and principal payments on near-term maturities, limiting the availability of cash for other purposes;- expose us to the loss of a portion of our equity interest in our principal operating subsidiary in China, or to dilution of that interest, if we fail to repay the bonds at maturity and the bondholder elects to dispose of the pledged equity interests or to convert the bonds into equity interests of our Chinese subsidiary;- limit our ability to invest in our business and future business opportunities, including the completion of the Clarksville expansion;- limit our ability to refinance our indebtedness, particularly given our going-concern qualification and negative operating cash flows;- limit our flexibility in planning for, or reacting to, changes in our business and industry;- increase our cost of borrowing;- place us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged; and - impair our ability to obtain additional financing for working capital, capital expenditures, debt repayments or general corporate purposes. Our ability to meet our cash requirements, including our debt service obligations, is dependent upon our ability to maintain and improve our operating performance, which is subject to general economic and competitive conditions and to financial, business and other factors, many of which are beyond our control. Our existing liquidity and capital resources may not be sufficient to sustain our business and service our debt obligations, and if our operating results do not meet our expectations or if we experience adverse developments that we do not currently anticipate, we could face liquidity constraints that materially and adversely affect our business, results of operations and financial condition.
- Debt & Financing - Risk 4Our plans to mitigate the substantial doubt may not be effectively implemented, and cost-reduction and restructuring actions may themselves strain near-term liquidity.
In response to the substantial doubt about our ability to continue as a going concern, management has developed plans intended to improve our liquidity position, including: - implementing operating cost reduction initiatives across all areas of the business;- reducing or deferring certain discretionary capital expenditures;- negotiating extensions or restructurings of debt obligations within our China operating entities;- refinancing short-term bank borrowings as they mature; and - evaluating additional financing alternatives, including potential capital-raising transactions and strategic opportunities. Certain elements of these plans have not been fully implemented and depend on factors outside our control, including the willingness of lenders to agree to extensions or restructurings, the availability of financing on acceptable terms and the successful execution of cost-reduction initiatives. Management has concluded that these plans cannot be deemed probable of being effectively implemented and, accordingly, substantial doubt about our ability to continue as a going concern has not been alleviated. The cash costs associated with restructuring actions, including severance payments, facility exit costs and contract termination fees, may further strain our near-term liquidity and could accelerate the timing of a covenant breach or the need for additional financing. There can be no assurance that the initiatives described above will produce the expected benefits or will be sufficient to allow us to maintain liquidity and operations in the ordinary course.
- Debt & Financing - Risk 5Additional financing may not be available on acceptable terms, or at all, and we may be required to significantly reduce, restructure or cease operations or pursue alternatives including proceedings under the U.S. Bankruptcy Code.
We are evaluating additional financing alternatives, including potential capital-raising transactions through debt or equity securities. However, recent equity market conditions and our business performance have rendered equity funding unfavorable as a primary liquidity mechanism. Our current indebtedness and the restrictive covenants in our loan agreements may further limit the types and terms of additional financing available to us. We may not be able to timely secure additional financing on favorable terms, or at all, due to, among other things, our history of operating losses and negative cash flows, the substantial doubt about our ability to continue as a going concern, general macroeconomic conditions, market volatility and the terms of our existing indebtedness. If we raise additional funds through the issuance of equity or convertible debt or other equity-linked securities, our existing stockholders could suffer significant dilution. If we are unable to obtain adequate financing when we require it, our ability to grow or support our business and to respond to business challenges could be significantly limited. Without additional sources of financing, our ability to continue as a going concern would be materially and adversely impacted, and we may be required to significantly reduce, restructure or cease our operations or to pursue other alternatives, including, but not limited to, commencing a case under the U.S. Bankruptcy Code. Any such outcome would have a material adverse effect on holders of our common stock, who would likely lose all or substantially all of their investment.
- Debt & Financing - Risk 6Restrictive covenants, the need for waivers or amendments, cross-default provisions, and acceleration of our indebtedness could adversely affect our liquidity.
Our loan agreements, credit agreements, and bonds payable contain restrictive covenants and customary events of default that may limit our operational and financial flexibility. As of June 30, 2026, the Company was in compliance with all material terms and covenants under its loan agreements, credit agreements, and bonds. However, such compliance does not alleviate the substantial doubt about our ability to continue as a going concern. Our projected cash flows may not be sufficient to meet our debt obligations over the next twelve months, and our ability to satisfy the $104.2 million of near-term maturities depends on the continued refinancing or extension of maturing borrowings. Such refinancing or extension depends on negotiations with lenders and other factors outside our control, and management has concluded that the refinancing plan cannot be deemed probable. As of June 30, 2026, assets with an aggregate carrying value of $183.2 million were pledged to secure our bank facilities, and $19.8 million of machinery and equipment was separately pledged to secure bank acceptance notes. Outstanding liens totaled $1.8 million. Our debt arrangements contain cross-default provisions whereby a default under one agreement could result in default under the agreements covering other borrowings. The occurrence of a default under any of our borrowing arrangements would permit our lenders to declare all amounts outstanding under those borrowing arrangements to be immediately due and payable. If our lenders accelerate the repayment of borrowings, we cannot assure you that we will have sufficient assets or liquidity to repay those borrowings. Future non-compliance with financial covenants may limit our access to existing facilities, require us to seek waivers or amendments that may not be available on acceptable terms or at all or result in an acceleration of debt obligations, any of which would further adversely impact liquidity.
- Debt & Financing - Risk 7If we are unable to meet our liquidity requirements, we could be forced to sell assets, restructure or refinance our debt, or raise additional capital on unfavorable terms.
Our ability to meet our liquidity requirements depends in part on our ability to generate cash from operations, refinance or extend maturing borrowings, and obtain additional capital. As of June 30, 2026, cash held by our Chinese subsidiaries ($39.7 million) and European subsidiaries ($23.5 million) cannot currently be repatriated to fund our U.S. operations or the Clarksville expansion due to foreign regulatory restrictions, adverse tax consequences, and localized working capital needs. As a result, the cash and cash equivalents available to fund our U.S. operations and capital commitments are substantially less than our consolidated cash balance of $127.8 million. If we are unable to generate sufficient operating cash flow or obtain additional financing, we could be forced to sell assets, including assets previously held for sale, restructure or refinance our debt or raise additional capital through sales of equity or debt on terms that may be dilutive or otherwise unfavorable. We have previously funded U.S. investment requirements from held-for-sale asset proceeds. We may be unable to take any of these actions on satisfactory terms, in a timely manner, or at all, due to, among other things, our high level of indebtedness, our operating performance and the restrictions in our existing debt agreements. Any of these actions may not be sufficient to allow us to service our debt obligations or maintain our operations, and our failure to generate sufficient operating cash flow to pay our debt obligations could have a material adverse effect on our business, financial condition and results of operations.
- Corporate Activity and Growth - Risk 8The substantial doubt about our ability to continue as a going concern may adversely affect our relationships with customers, suppliers and partners, our ability to attract and retain qualified personnel and our ability to raise capital or enter into strategic transactions.
The substantial doubt about our ability to continue as a going concern, and any public disclosure thereof, may adversely affect the willingness of customers, suppliers, and partners to do business with us. In particular, our financial condition may cause customers and partners to reduce their purchases of our products, demand more favorable payment or contract terms, seek alternative suppliers or cease doing business with us altogether. Suppliers may tighten credit terms, require prepayment or cash-on-delivery, reduce allocation of components or decline to extend trade credit. In addition, the substantial doubt may make it more difficult for us to attract and retain qualified personnel, as current and prospective employees may seek employment with companies perceived to be more financially stable. The loss of key personnel in engineering, manufacturing, sales, or management could disrupt operations and impair our ability to execute on our business strategy. The substantial doubt may also impair our ability to raise capital, enter into strategic transactions or partnerships or negotiate with counterparties on favorable terms. Any of these effects could reduce revenue, increase costs, disrupt operations or further adversely affect our liquidity, financial condition and results of operations.
Risk Highlights Q2, 2026
Risk Word Cloud
Risk Factors Full Breakdown - Total Risks 105
- Share Price & Shareholder Rights - Risk 1AddedWe may not remain in compliance with the continued listing requirements for The Nasdaq Stock Market. If we do not maintain compliance, or regain compliance following any period of non-compliance, our common stock may be delisted, which could affect the market price and liquidity for our common stock and reduce our ability to raise additional capital.
Our common stock is listed on The Nasdaq Capital Market. In order to maintain that listing, we must satisfy Nasdaq's continued listing requirements, including the requirement to maintain a minimum bid price of $1.00 per share for continued listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (the "Minimum Bid Price Requirement"). Beginning on July 13, 2026, the closing bid price of our common stock has been below $1.00 per share. We anticipate that, if the closing bid price of the common stock remains below $1.00 per share for 30 consecutive business days, we will receive a noncompliance letter from the Listing Qualifications Staff of the Nasdaq notifying us that we are not in compliance with the Minimum Bid Price Requirement. As of the date of this filing, we have not received any such letter from Nasdaq. We will continue to monitor the closing bid price of our common stock and, if we become non-compliant, will seek to regain compliance with all applicable Nasdaq requirements within the allotted compliance period. Any non-compliance may be costly, divert management's time and attention, and could have a material adverse effect on our business, reputation, financing and results of operations. A delisting could substantially decrease trading in our common stock, adversely affect the market liquidity of our common stock as a result of the loss of market efficiencies associated with Nasdaq and the loss of federal preemption of state securities laws, materially adversely affect our ability to obtain financing on acceptable terms, if at all, and may result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities. Additionally, the market price of our common stock may decline further and stockholders may lose some or all of their investment.
- Share Price & Shareholder Rights - Risk 2The price of our common stock may be volatile or may decline regardless of our operating performance.
The trading price of common stock may be volatile. This volatility of our common stock may be due to a number of factors such as those listed in "-Risks Related to our Business and Industry" and "-Risks Related to doing Business in China" and the following: - our operating and financial performance and prospects;- our quarterly or annual earnings or those of other companies in our industry compared to market expectations;- conditions that impact demand for our products;- future announcements concerning our business, our product users' businesses or our competitors' businesses;- the public's reaction to our press releases, other public announcements and filings with the SEC;- the size of our public float;- coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;- the issuance of short reports;- market and industry perception of our success, or lack thereof, in pursuing our growth strategy;- strategic actions by us or our competitors, such as acquisitions or restructurings;- changes in laws or regulations which adversely affect our industry or us;- changes in accounting standards, policies, guidance, interpretations or principles;- changes in senior management or key personnel;- issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock;- changes in our dividend policy;- adverse resolution of new or pending litigation against us;- the impact of possible pandemics on our financial condition and the results of operations;- the ongoing conflicts in the Middle East, including hostilities with Iran, the war between Russia and Ukraine, and other current or future conflicts, and any restrictive actions that have been or may be taken by the U.S. and/or other countries in response thereto, such as economic, financial or trade sanctions or export controls; and - changes in general market, economic and political conditions in the U.S. and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events. These broad market and industry factors may materially reduce the market price of common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of common stock is low. In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, we could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.
- Share Price & Shareholder Rights - Risk 3Our Charter and Bylaws contain certain provisions that limit the ability of stockholders to take certain actions and could delay, discourage or prevent takeover attempts that stockholders may consider favorable.
Our Charter and Bylaws contain provisions that could have the effect of rendering more difficult, discouraging, delaying or preventing a takeover attempt that may be beneficial to our stockholders but that is deemed undesirable by Yang Wu and therefore depresses the trading price of our common stock. These provisions could also make it difficult for our stockholders to take certain actions, including electing directors who are not nominated by Yang Wu or the Tuscan Group or amending the Charter. Our Charter and Bylaws provide for, among other things: - the ability of the board of directors (the "Board") to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;- the limitation of the liability of, and the indemnification of, our directors and officers;- any increase or decrease in the number of directors will require the affirmative vote of the directors nominated by Yang Wu as provided in the Stockholders Agreement (as defined below);- the requirement that any Board vacancies occurring by reason of the death, resignation or removal of any director nominated by Yang Wu or the Tuscan Group must be filled by the stockholder who was entitled to nominate such director to the Board;- the requirement that committees of the Board will consist of the number of directors nominated by Yang Wu that is proportionate to the number of directors on the Board nominated by Yang Wu;- the prohibition of stockholder action by written consent for any action that is required or permitted to be taken at an annual or special stockholders meeting;- the ability to call for a special meeting of stockholders will only be available to (i) the Board, (ii) the chairman of the Board and (iii) Yang Wu, so long as Yang Wu beneficially owns at least 10% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors;- the limitation that directors on the Board may only be removed for a cause and only upon the affirmative vote of the holders of at least a majority of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, voting together as a single class;- the election that the Company will not be governed by Section 203 of the DGCL, which will prohibit the Company from taking certain actions involving an "interested stockholder" for a certain period of time;- the requirement that any amendment to the Charter will be approved by (i) the holders of 75% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, so long as Yang Wu beneficially owns at least 10% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, or (ii) the holders of a majority of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors, if Yang Wu ceases to beneficially own at least 10% of the total voting power of all the then outstanding shares of stock of the Company entitled to vote generally in the election of directors; and - the ability of the Board to amend the Bylaws, which may allow the Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Bylaws to facilitate an unsolicited takeover attempt. These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in the Board or management. Any provision of the Charter or Bylaws that has the effect of delaying or preventing a change in control could limit the opportunity for stockholders to receive a premium for their shares of the Company' capital stock and could also affect the price that some investors are willing to pay for the Company' common stock.
- Share Price & Shareholder Rights - Risk 4Our Charter provides, subject to limited exceptions, that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for certain stockholder litigation matters, which could limit stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our Charter provides that unless we consent in writing to the selection of an alternative forum, (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, employee or stockholder to us or our stockholders, (iii) any action asserting a claim (A) arising pursuant to any provision of the Delaware General Corporation Law ("DGCL"), the Charter or the Bylaws or (B) as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware will, to the fullest extent permitted by applicable law, be solely and exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have jurisdiction, any state or federal court located in the State of Delaware with jurisdiction. The forum provision further provides that the federal district courts of the United States of America will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for the resolution of any action asserting claims arising under the Securities Act of 1933, as amended (the "Securities Act"). This forum selection provision does not apply to any action asserting claims arising under the Exchange Act or the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of and consented to the forum provisions in the Charter. This choice of forum provision may limit a stockholder's ability to bring a claim in a judicial forum that we do not find favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in the Charter to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
- Share Price & Shareholder Rights - Risk 5The Tuscan Group is likely to make a substantial profit even if the trading price of our common stock materially declines due to the nominal purchase price the Tuscan Group paid for the Founder Shares (as defined below).
The Tuscan Group paid only a nominal aggregate purchase price of $25,000 for the Founder Shares, or approximately $0.004 per share, while the initial public offering ("IPO") price of our common stock was $10.00 per share and the trading price of our common stock was $2.10 as of March 9, 2026. As a result, even if the trading price of our common stock significantly declines, the Tuscan Group will stand to make a significant profit on its investment in us. In addition, the Tuscan Group could potentially recoup its entire investment in us even if the trading price of our common stock is less than $1.00 per share. As a result, the Tuscan Group is likely to make a substantial profit on its investment in us even if the trading price of our common stock declines, while our public stockholders could lose significant value in their common stock and experience a negative rate of return on the shares they purchased in the IPO or in the public market.
- Share Price & Shareholder Rights - Risk 6Even though the warrants have become exercisable, there is no guarantee that the warrants will be in the money prior to their expiration, and they may expire worthless.
The exercise price for our warrants is $11.50 per share of common stock, and the trading price of our common stock was $2.10 as of March 9, 2026. There is no guarantee that the warrants will be exercised following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless. Further, since the registration of the warrants was not completed within 90 days following the Business Combination, pursuant to the Registration Rights and Lock-Up Agreement, warrant holders may exercise the warrants on a net-share basis.
- Share Price & Shareholder Rights - Risk 7Resales of our common stock may cause the market price of our securities to drop significantly, even if our business is doing well.
In connection with the Business Combination, outstanding warrants to purchase an aggregate of 28,437,000 shares of our common stock are exercisable in accordance with the terms of the Warrant Agreement governing those securities. The exercise price of these warrants is $11.50 per share. To the extent such warrants are exercised, additional shares of our common stock will be issued, which will result in dilution to the holders of our common stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market or the fact that such warrants may be exercised could adversely affect the market price of our common stock. However, there is no guarantee that the warrants will ever be in the money prior to their expiration, and as such, the warrants may expire worthless. Further, on October 1, 2021, we filed a registration statement with the SEC on Form S-8 providing for the registration of shares of common stock issued or reserved for issuance under the Microvast Holdings, Inc. 2021 Equity Incentive Plan (the "2021 Plan"). Subject to the satisfaction of vesting conditions and the expiration of lockup agreements, shares registered under the registration statement on Form S-8 are available for resale immediately in the public market without restriction and such resales could adversely affect the trading price and volatility of our common stock.
- Share Price & Shareholder Rights - Risk 8We may issue additional shares of common stock or other equity or convertible securities, which may depress the market price of our common stock and could make it difficult for another company to acquire us.
From time to time in the future, we issue additional shares of common stock or other equity or convertible securities for any reason or in connection with, among other things, future acquisitions, the redemption of outstanding warrants, or repayment of outstanding indebtedness, without stockholder approval, in a number of circumstances. Our issuance of additional shares of common stock or other equity or convertible securities of equal or senior rank would have the following effects: - our existing stockholders' proportionate ownership interest in us will decrease;- the amount of cash available per share, including for payment of dividends in the future, may decrease;- the relative voting strength of each previously outstanding share of common stock may be diminished;- the market price of common stock may decline; and - it could make it difficult for another company to acquire us. In the future, we may obtain financing or to further increase our capital resources by issuing additional shares of our capital stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability to pay dividends to the holders of common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. As a result, holders of common stock bear the risk that our future offerings may reduce the market price of common stock and dilute their percentage ownership.
- Share Price & Shareholder Rights - Risk 9If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or industry or downgrade the common stock, the price of the common stock could decline.
The trading market for the common stock depends in part on the research and reports that third-party securities analysts publish about us and the industries in which we operate. We may be unable or slow to attract research coverage and if one or more analysts cease coverage on us, the price and trading volume of our securities would likely be negatively impacted. If any of the analysts that may cover us change their recommendation regarding our securities adversely, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline. If any analyst that may cover us ceases covering us or fails to regularly publish reports on us, it could cause us to lose visibility in the financial markets, which could cause the price or trading volume of the securities to decline. Moreover, if one or more of the analysts who cover us downgrades the common stock, or if our reporting results do not meet their expectations, the market price of the common stock could decline.
- Share Price & Shareholder Rights - Risk 10Our securities may be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act (the "HFCAA") in the future if the PCAOB is unable to fully inspect or investigate our China-based auditors under the HFCAA. The delisting of our securities, or the threat of their being delisted, may materially and adversely affect the value of your investment.
Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our securities from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the SEC, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 10-K for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our securities are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our securities when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our securities. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.
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