UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

____________________________

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 001-04321

____________________________

Movella Holdings Inc.

(Exact name of registrant as specified in its charter)

____________________________

Delaware	98-1575384
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
Suite 110, 3535 Executive Terminal Drive Henderson, NV	89052
(Address of Principal Executive Offices)	(Zip Code)

____________________________

(725) 238-5682

Registrant's telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $.00001 par value per share	MVLA	The Nasdaq Stock Market LLC
Warrants, each warrant exercisable for one share of common stock at an exercise price of $11.50	MVLAW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

The registrant had outstanding 50,907,431 shares of common stock as of May 8, 2023.

Table of Contents

		Page
Part I - Financial Information
Item 1.	Financial Statements (Unaudited)	1
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	47
Item 4.	Controls and Procedures	48
Part II - Other Information
Item 1.	Legal Matters	50
Item 1A.	Risk Factors	50
Item 6.	Exhibits	50
Signatures		52

Part I - Financial Information

Item 1. Financial Statements

MOVELLA HOLDINGS INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

	As of March 31, 2023		As of December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	62,096	$	14,334
Accounts receivable, net of allowance for credit losses of $440 and $144 at March 31, 2023 and December 31, 2022	4,716		6,690
Inventories	6,570		5,164
Prepaid expenses and other current assets	5,657		3,274
Total current assets	79,039		29,462
Property and equipment, net	2,362		2,361
Goodwill	36,666		36,381
Intangible assets, net	843		5,807
Non-marketable equity securities	25,285		25,285
Capitalized equity issuance costs and other assets	1,735		4,265
Deferred tax assets	86		86
Right-of-use assets	3,107		3,281
Total assets	$	149,123	$	106,928
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	3,896	$	5,967
Accrued expenses and other current liabilities	7,356		7,944
Line of credit and current portion of long-term debt	148		148
Current portion of deferred revenue	3,159		3,334
Payable to Kinduct sellers – current	—		4,303
Total current liabilities	14,559		21,696
Long-term portion of term debt	43,187		25,649
Convertible notes, net – related party (Note 12)	—		6,186
Warrant liabilities	1,513		—
Deferred revenue, net of current portion	1,389		1,344
Operating lease liabilities and other non-current liabilities	2,982		3,088
Total liabilities	63,630		57,963
Commitments and contingencies (Note 13)
Mezzanine equity

1

MOVELLA HOLDINGS INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

	As of March 31, 2023		As of December 31, 2022
Redeemable convertible preferred stock, $0.00001 par value. 0 shares authorized, issued, and outstanding at March 31, 2023; 3,207,472 shares authorized, issued and outstanding as of December 31, 2022; liquidation preference of $30,000 as of December 31, 2022	—		41,991
Non-redeemable convertible preferred stock, $0.00001 par value. 20,000,000 shares authorized, 0 shares issued, and outstanding at March 31, 2023; 29,524,294 shares authorized and 24,338,566 shares issued and outstanding as of December 31, 2022; liquidation preference of $146,548 as of December 31, 2022	—		143,192
Total mezzanine equity	—		185,183
Stockholders’ equity (deficit)
Common stock, $0.00001 par value. 900,000,000 shares authorized, 50,693,308 shares issued and outstanding at March 31, 2023; 46,430,391 shares authorized, 6,231,947 shares issued and outstanding at December 31, 2022	1		1
Additional paid-in capital	206,428		692
Accumulated other comprehensive loss	(1,386)		(1,646)
Accumulated deficit	(126,180)		(142,016)
Total Movella stockholders’ equity (deficit)	78,863		(142,969)
Non-controlling interest in subsidiaries	6,630		6,751
Total stockholders’ equity (deficit)	85,493		(136,218)
Total liabilities, mezzanine equity and stockholders’ equity (deficit)	$	149,123	$	106,928

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

MOVELLA HOLDINGS INC.

Condensed Consolidated Statements of Operations

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Revenues
Product	$	7,659	$	8,100
Service	1,508		1,408
Total revenues	9,167		9,508
Cost of revenues
Product	2,361		3,589
Service	1,210		1,113
Total cost of revenues	3,571		4,702
Gross profit	5,596		4,806
Operating expenses
Research and development	2,904		3,536
Sales and marketing	3,480		3,440
General and administrative	3,957		3,337
Impairment of intangible assets	4,657		—
Total operating expenses	14,998		10,313
Loss from operations	(9,402)		(5,507)
Other income (expense)
Loss on debt extinguishment	(107)		—
Change in fair value of warrant liabilities	1,390		—
Debt issuance costs	(7,945)		—
Revaluation of debt, net	31,868		—
Interest expense	(172)		(400)
Interest income	256		4
Other income (expense), net	(115)		83
Income (loss) before income taxes	15,773		(5,820)
Income tax expense	58		15
Net income (loss)	15,715		(5,835)
Net loss attributable to non-controlling interests	(121)		(239)
Net income (loss) attributable to Movella Holdings Inc.	15,836		(5,596)
Deemed dividend from accretion of Series D-1 preferred stock	(316)		(659)
Net income (loss) attributable to common stockholders	$	15,520	$	(6,255)
Earnings per share attributable to common stockholders
Basic	$	0.51	$	(1.38)
Diluted	$	0.36	$	(1.38)
Weighted average shares used in computing earnings per share attributable to common stockholders
Weighted average shares outstanding, basic	30,440,497		4,529,543
Diluted	44,562,485		4,529,543

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

MOVELLA HOLDINGS INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Net income (loss)	$	15,715	$	(5,835)
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of tax	260		20
Comprehensive income (loss)	15,975		(5,815)
Comprehensive loss attributable to non-controlling interests	(121)		(239)
Comprehensive income (loss) attributable to Movella Holdings Inc.	$	16,096	$	(5,576)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

MOVELLA HOLDINGS INC.

Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit)

(In thousands, except share data)

(Unaudited)

	Redeemable convertible preferred stock			Non-redeemable convertible preferred stock			Common stock
	Shares	Amount		Shares	Amount		Shares	Amount		Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Non-controlling interests		Total
Balance, December 31, 2021	6,562,724	$	39,307	49,792,827	$	143,192	9,184,092	$	1	$	—	$	1,431	$	(109,601)	$	7,383	$	(100,786)
Retroactive conversion of shares due to Business Combination	(3,355,252)	—		(25,457,033)	—		(4,695,450)	—		—		—		—		—		—
Balance at December 31, 2021, as converted	3,207,472	39,307		24,335,794	143,192		4,488,642	1		—		1,431		(109,601)		7,383		(100,786)
Stock-based compensation expense	—	—		—	—		—	—		313		—		—		—		313
Accretion of Series D-1 convertible preferred stock	—	659		—	—		—	—		(418)		—		(241)		—		(659)
Issuance of common stock for exercise of options	—	—		—	—		88,217	—		87		—		—		—		87
Issuance of common stock warrants to Eastward	—	—		—	—		—	—		18		—		—		—		18
Foreign currency translation adjustment	—	—		—	—		—	—		—		20		—		—		20
Net loss	—	—		—	—		—	—		—		—		(5,596)		(239)		(5,835)
Balance, March 31, 2022	3,207,472	39,966		24,335,794	143,192		4,576,859	1		—		1,451		(115,438)		7,144		(106,842)
Balance, December 31, 2022	6,562,724	41,991		49,798,500	143,192		12,751,023	1		692		(1,646)		(142,016)		6,751		(136,218)
Retroactive conversion of shares due to Business Combination	(3,355,252)	—		(25,459,934)	—		(6,519,076)	—		—		—		—		—		—
Balance at December 31, 2022, as converted	3,207,472	41,991		24,338,566	143,192		6,231,947	1		692		(1,646)		(142,016)		6,751		(136,218)
Stock-based compensation expense	—	—		—	—		—	—		664		—		—		—		664
Accretion of Series D-1 convertible preferred stock prior to close of Business Combination Agreement	—	316		—	—		—	—		(316)		—		—		—		(316)
Issuance of common stock for exercise of options prior to close of Business Combination Agreement	—	—		—	—		3,970	—		10		—		—		—		10
Issuance of common stock upon conversion of Preferred stock	(3,207,472)	(42,307)		(24,338,566)	(143,192)		27,583,963	—		185,499		—		—		—		185,499
Issuance of common stock in connection with Business Combination Agreement, net of redemptions and transaction costs	—	—		—	—		15,954,708	—		13,359		—		—		—		13,359
Issuance of common stock upon conversion of Convertible notes	—	—		—	—		651,840	—		6,520		—		—		—		6,520
Issuance of common stock upon conversion of Legacy Movella warrants	—	—		—	—		266,880	—		—		—		—		—		—
Foreign currency translation adjustment	—	—		—	—		—	—		—		260		—		—		260
Net income (loss)	—	—		—	—		—	—		—		—		15,836		(121)		15,715
Balance, March 31, 2023	—	$	—	—	$	—	50,693,308	$	1	$	206,428	$	(1,386)	$	(126,180)	$	6,630	$	85,493

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

MOVELLA HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Cash flows from operating activities
Net income (loss)	$	15,715	$	(5,835)
Adjustments to reconcile net income (loss) to net cash used in operating activities
Depreciation and amortization	672		1,852
Stock-based compensation expense	664		313
Allowance for credit losses	296		—
Impairment of intangible assets	4,657		—
Unrealized loss on marketable securities	—		58
Non-cash interest expense from note accretion	61		76
Non-cash interest expense from deferred payout accretion	57		—
Amortization of debt discount and debt issuance costs	52		69
Gain on change in fair value of warrant liabilities	(1,390)		—
Gain on revaluation of debt, net	(31,868)		—
Loss on debt extinguishment	107		—
Debt issuance costs	7,945		—
Right-of-use assets	174		—
Changes in operating assets and liabilities:
Accounts receivable	1,788		728
Inventories	(1,229)		(1,063)
Prepaid expenses and other assets	(1,408)		(50)
Other assets	(1,594)		10
Accounts payable	629		(1,046)
Accrued expenses and other liabilities	(397)		(297)
Deferred revenue	(235)		514
Other liabilities	(136)		(74)
Net cash used in operating activities	(5,440)		(4,745)
Cash flows from investing activities
Purchase of intangibles	(15)		(153)
Purchases of property and equipment	(191)		(215)
Net cash used in investing activities	(206)		(368)
Cash flows from financing activities
Proceeds from Venture Linked Notes	75,000		—
Payment of debt issuance costs	(8,791)		—
Proceeds from Business Combination	36,048		—
Payment of equity issuance costs	(18,682)		—
Repayment of loans using proceeds from Venture Linked Notes	(25,557)		—
Proceeds from term loans and revolving line of credit, net	—		943
Proceeds from issuance of convertible notes	—		4,873
Principal payments of loans	—		(280)
Proceeds from the exercise of stock options	10		87
Payment of deferred payout to Kinduct sellers	(4,360)		—
Net cash provided by financing activities	53,668		5,623

6

MOVELLA HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2023		2022
Effect of foreign exchange rate changes on cash and equivalents	(260)		(219)
Net increase in cash and cash equivalents	47,762		291
Cash and cash equivalents
Beginning of period	14,334		11,166
End of period	$	62,096	$	11,457
Supplemental disclosures of cash flow information
Cash paid for interest	$	557	$	207
Cash paid for taxes, net of refunds	59		47
Supplemental disclosure of non-cash financing activity
Accretion of Series D-1 convertible preferred Stock	$	316	$	659
Issuance of convertible notes in exchange for Kinduct deferred payout	—		1,148
Issuance of warrants to lender	—		18
Right-of-use assets obtained in exchange for operating lease liabilities	—		4,280
Issuance of common stock upon conversion of Convertible notes	6,520		—
Issuance of common stock upon conversion of preferred stock	185,499		—
Acquisition of warrant liabilities	2,903		—
Capitalized equity issuance costs applied to proceeds	4,248		—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

1.    Overview and Summary of Significant Accounting Policies

Description of Business

Movella Holdings Inc. ( the "Company" or "New Movella" or "Movella) is a global full-stack provider of integrated sensors, software, and analytics that enable the digitization of movement. Movella’s solutions accelerate innovation and enable our customers, partners, and users to create extraordinary outcomes. Movella powers real-time character movement in digital environments, transforms movement into digital data that provides meaningful and actionable insights, renders digitized movement to enable the creation of sophisticated and true-to-life animated content, creates new forms of monetizable IP with unique biomechanical digital content, and provides spatial movement orientation and positioning data. Partnering with leading global brands such as Electronic Arts, EPIC Games, 20th Century Studios, Netflix, Toyota, Siemens and over 2,000 customers in total, Movella currently serves the entertainment, health and sports, and automation and mobility markets. Additionally, Movella believes it is well-positioned to provide critical enabling solutions for applications in emerging high-growth markets such as the Metaverse, next-generation gaming, live streaming, digital health, and autonomous robots with recently introduced offerings and products currently in development.

Movella Inc. (“Legacy Movella”) was incorporated in the state of Delaware on August 14, 2009. Previously the Company was known as mCube Inc, and on September 27, 2021, the Company was renamed to MovellaTM. The Company is headquartered in Henderson, Nevada and has subsidiaries in the Netherlands, Canada, United States, Taiwan, China, and India.

Merger with Pathfinder Acquisition Corporation

On February 10, 2023, (the “Closing Date”), Movella Holdings Inc., a Delaware corporation (formerly known as Pathfinder Acquisition Corporation (“Pathfinder”)), consummated the previously announced business combination (the “Business Combination”) contemplated by that certain Business Combination Agreement, dated October 3, 2022 (the “Business Combination Agreement”), by and among Pathfinder, Motion Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of Pathfinder (“Merger Sub”) and Movella Inc., a Delaware corporation.

On the Closing Date, promptly following the consummation of the Domestication, Merger Sub merged with and into Movella (the “Merger”), with Movella continuing as the surviving company in the Merger and, after giving effect to the Merger, Movella became a wholly owned subsidiary of New Movella (the time that the Merger became effective being referred to as the “Effective Time”). Pathfinder’s Class A ordinary shares, public warrants and the Pathfinder Units were historically quoted on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbols “PFDR,” “PFDRW,” and “PFDRU,” respectively. On the Closing Date, the Pathfinder Units automatically separated into the component securities and, as a result, no longer trade as a separate security. On February 13, 2023, the New Movella Common Stock and warrants began trading on Nasdaq under the symbols “MVLA” and “MVLAW,” respectively. See Note 4. Reverse Recapitalization for additional information.

The Company accounted for the Business Combination as a reverse recapitalization whereby Legacy Movella was determined as the accounting acquirer and PFDR as the accounting acquiree. This determination was primarily based on:

• Legacy Movella stockholders having the largest voting interest in New Movella;

• the board of directors of New Movella having seven members, and Legacy Movella’s former stockholders having the ability to nominate the majority of the members of the board of directors;

• Legacy Movella management continuing to hold executive management roles for the post-combination company and being responsible for the day-to-day operations;

• the post-combination company assuming the Legacy Movella name;

• New Movella maintaining the pre-existing Legacy Movella headquarters; and

• the intended strategy of New Movella being a continuation of Legacy Movella’s strategy.

Accordingly, the Business Combination was treated as the equivalent of Legacy Movella issuing stock for the net assets of Pathfinder, accompanied by a recapitalization. The net assets of Pathfinder are stated at historical cost, with no goodwill or other intangible assets recorded.

While Pathfinder was the legal acquirer in the Business Combination, because Legacy Movella was determined as the accounting acquirer, the historical financial statements of Legacy Movella became the historical financial statements of the combined company, upon the consummation of the Business Combination. As a result, the financial statements included in the accompanying unaudited interim condensed consolidated financial statements reflect (i) the historical operating results of Legacy Movella prior to the Business Combination; (ii) the combined results of the Company and

8

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Legacy Movella following the closing of the Business Combination; (iii) the assets and liabilities of Legacy Movella at their historical cost; and (iv) the Company’s equity structure for all periods presented.

In connection with the Business Combination, the Company has converted the equity structure for the periods prior to the Business Combination to reflect the number of shares of New Movella’s common stock issued to Legacy Movella’s stockholders in connection with the recapitalization transaction. As such, the shares, corresponding capital amounts and earnings per share, as applicable, related to Legacy Movella’s convertible preferred stock and common stock prior to the Business Combination have been retroactively converted as shares by applying the exchange ratio of approximately 0.4887 established in the Business Combination.

As of March 31, 2023, the Company incurred a total of $29.2 million of business combination related costs which principally consisted of advisory, legal, other professional fees, debt discount and debt issuance costs. The Company expensed $1.6 million related to the Venture Linked Notes in the twelve months ended December 31, 2022 and an additional $7.9 million related to the Venture Linked Notes in the three months ended March 31, 2023. Upon consummation of the business combination agreement in February 2023, $19.7 million of transaction costs have been recorded as a reduction in the proceeds from the business combination.

Basis of Presentation and Principles of Consolidation

The information contained herein has been prepared by Movella Holdings Inc. (the “Company”) in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). The condensed consolidated financial statements include the accounts of the Company, its wholly-owned and majority-owned subsidiaries, and joint ventures in which the Company is the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation. The information at March 31, 2023 and the results of the Company’s operations for the three months ended March 31, 2023 and 2022 are unaudited. The condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring accruals, except otherwise disclosed herein, which are, in the opinion of management, necessary for a fair statement of the results of the interim periods presented. These unaudited condensed consolidated financial statements and notes hereto should be read in conjunction with the audited financial statements and notes thereto included elsewhere herein. Certain prior period amounts were reclassified to conform to the current period presentation. These reclassifications did not affect total revenues, costs and expenses, net loss, assets, liabilities or stockholders’ deficit. Except as set forth below, the accounting policies used in preparing these unaudited condensed consolidated financial statements are the same as those described in the Company’s financial statements for the year ended December 31, 2022. There were no material changes to our significant accounting policies and estimates during the three months ended March 31, 2023 with the exception of the addition of policies relating to the FP Venture Linked Notes and assumed warrant liabilities. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for any other interim period or for the year as a whole.

Liquidity

The Company has prepared its condensed consolidated financial statements assuming that the Company will continue as a going concern. The Company has incurred recurring losses from operations and net cash used in operating activities including a net loss from operations of $9.4 million and net cash used in operating activities of $5.4 million for the three months ended March 31, 2023. The Company has cash, cash equivalents, and marketable securities of $62.1 million; there are restrictions on the Company’s ability to transfer cash and cash equivalents of $0.2 million held outside of the U.S. by its subsidiaries in China and $1.0 million held by its joint venture entity in China as of March 31, 2023. The continuation of the Company as a going concern is dependent upon, among other things, the continued financial support from its investors to fund operations, the ability of the Company to obtain necessary equity or debt financing, and the attainment of profitable operations.

On February 10, 2023, the Company consummated the Business Combination Agreement with Pathfinder Acquisition Corporation whereby through a series of transactions, the Company received approximately $58.0 million of net cash proceeds after transaction costs and repayment of debt. See Note 4. Reverse Recapitalization for additional details.

The Note Purchase Agreement also contains a financial covenant requiring the Company and its subsidiaries to achieve positive EBITDA on a consolidated basis for the most recently ended four-quarter period, commencing with the last day of the fiscal quarter ending June 30, 2024 and as of the last day of each fiscal quarter thereafter.

With the cash, cash equivalents, and marketable securities on hand at March 31, 2023, the Company believes the actions it has taken, and the measures it may take in the future, will provide sufficient liquidity to fund operations and capital expenditures over the next twelve months.

9

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The Company may seek to raise additional capital, which could be in the form of loans, convertible debt or equity, to fund future operating requirements and capital expenditures. The Company’s liquidity is highly dependent on its ability to increase revenues, control operating costs, and raise additional capital. The Company continues to closely monitor expenses to assess whether any immediate changes are necessary to enhance its liquidity. There can be no assurance that the Company will be able to raise additional capital on favorable terms, or execute on any other means of improving liquidity as described above.

Reclassification

Certain reclassifications have been made to the Company’s condensed consolidated financial statements for the three months ended March 31, 2022 to conform to the current period’s condensed consolidated financial statement presentation. The reclassifications had no impact on total revenues, expenses, assets, liabilities, stockholders’ deficit, cash flows from operating activities, cash flows from investing activities, or cash flows from financing activities for all periods presented.

Use of Estimates

The preparation of the accompanying condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Such estimates include, but are not limited to, measurement of valuation allowances relating to accounts receivable, inventories and deferred tax assets; estimates of future payouts for customer incentives and allowances and warranties; uncertain tax positions; incremental borrowing rates; fair values of stock-based compensation, fair value of embedded derivatives, fair value of the Venture Linked Notes, and valuation of common stock, preferred stock and warrants; estimates and assumptions used in connection with business combinations; useful lives of long-lived assets including intangible assets and property and equipment; revenue recognition; and future cash flows used to assess and test for impairment of goodwill and long-lived assets, if applicable. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors and adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

Due to the Coronavirus (“COVID-19”) pandemic, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require a material update to its estimates or judgments or an adjustment of the carrying value of its assets or liabilities as of March 31, 2023. However, these estimates may change as new events occur and additional information is obtained, as well as other factors related to COVID-19 that could result in material impacts to the Company’s condensed consolidated financial statements in future reporting periods.

Significant Risks and Uncertainties

The Company is subject to those risks common in the technology industry and also those risks common to early stage companies including, but not limited to, the possibility of not being able to successfully develop or market its products as forecasted, technological obsolescence, competition, dependence on key personnel and key external alliances, the successful protection of its proprietary technologies, compliance with government regulations, and the possibility of not being able to obtain additional financing when needed.

Segment Reporting

The Company’s Chief Executive Officer (“CEO”) is the Chief Operating Decision Maker (“CODM”). The CODM allocates resources and makes operating decisions based on financial information presented on a consolidated basis. The profitability of the Company’s product group is not a determining factor in allocating resources and the CODM does not evaluate profitability below the level of the consolidated company. Accordingly, the Company has determined that it has a single reportable segment and operating segment structure.

10

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Cash and Cash Equivalents

The Company’s cash and cash equivalents consist of highly liquid investments with insignificant interest rate risk and original maturities of three months of less at the time of purchase. Cash and cash equivalents include demand deposits and money market accounts. Interest is accrued as earned. Cash and cash equivalents are recorded at cost, which approximates fair value. Approximately $3.5 million and $4.1 million of the Company’s cash and cash equivalents balance were held outside of the U.S. as of March 31, 2023 and December 31, 2022, respectively. There are restrictions on the Company’s ability to transfer cash and cash equivalents of $0.2 million held outside of the U.S. by its subsidiaries in China and $1.0 million held by its joint venture entity in China as of March 31, 2023.

Debt Instruments

Venture Linked Notes

As permitted under ASC 825, Financial Instruments the Company has elected the fair value option to account for its Francisco Partners Venture Linked Notes (the “Venture Linked Notes”) primarily to avoid the separate recognition of certain linked instruments in the consolidated statements of operations. In accordance with ASC 825, the Company records the Venture Linked Notes at fair value with changes in fair value recorded as a component of other income (expense), net in the consolidated statements of operations and comprehensive loss. As a result of applying the fair value option, $0.8 million of direct costs and fees related to the Pre-Close Notes and $1.6 million related to the Venture Linked Notes was expensed during the year ended December 31, 2022 and an additional $7.9 million related to the Venture Linked Notes was expensed upon consummation of the Business Combination Agreement in February 2023.

Deferred Payout

On September 23, 2020, the Company acquired 100% of the issued and outstanding equity of Kinduct Technology, Inc. (“Kinduct”), a privately held company, in the business of developing intelligent health, fitness, and sport performance software. Related to the acquisition of Kinduct the Company agreed to three deferred cash installment payments totaling $10.0 million with a fair value of $9.4 million. The deferred payout schedule was $2.0 million due on March 23, 2021, $2.0 million due on September 23, 2021, and $6.0 million due on March 23, 2022. As of December 31, 2022, the Company had paid $4.0 million for the first two deferred cash installment payments with the remaining $6.0 million of installment payments partially satisfied with an exchange of $1.1 million owed under the deferred payout for convertible notes. See Note 5. Debt and Note 12. Related Party Transactions for more information on the convertible notes. Any amounts that were due and payable under the deferred payout agreement were accruing interest at 12% until paid in full. On December 16, 2022, the Company reached an agreement with the former owners of Kinduct to satisfy in full the remaining balance of the deferred payout, with $1.0 million paid on December 20, 2022 and quarterly installments of $0.5 million due beginning March 31, 2023 unless an Acceleration Event occurs. On February 10, 2023, an Acceleration Event occurred and the Company satisfied the deferred payout liability in full on February 13, 2023.

Debt and Equity Issuance Costs

Debt and equity issuance costs, which primarily consist of direct and incremental banking, legal, accounting, consulting, and printing fees relating to the merger transaction described in Note 4. Reverse Recapitalization, are allocated between the debt and equity elements of the transaction. Debt issuance costs of $7.9 million relating to the Venture Linked Notes have been expensed in the three months ended March 31, 2023, as the Company elected the fair value option for the Venture Linked Notes which closed on February 10, 2023. The Company recorded $19.7 million of equity issuance costs as a reduction in proceeds received from the business combination.

Acquired Intangible Assets

The Company’s intangible assets include developed technology, customer relationships, patents, trademarks and non-compete agreements. Intangible assets are stated at cost less accumulated amortization and are amortized over their estimated useful lives using the straight-line method. Acquired intangible assets and long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of an asset group containing these assets may not be recoverable. For the three months ended March 31, 2023 and 2022, the Company recognized $4.7 million and nil, respectively, of impairment losses.

11

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Warrant Liabilities

In connection with the Closing, all 596,435 Legacy Movella warrants were net exercised for 546,056 common shares of Legacy Movella which were then converted into 266,880 shares of New Movella common stock based on the Exchange Ratio of approximately 0.4887.

Upon the Closing of the Business Combination, the Company assumed 6,500,000 public warrants and 4,250,000 private placement warrants that were previously issued by PFDR. Each public warrant and private placement warrant is exercisable for 1 share of New Movella common stock at an exercise price of $11.50.

The Company evaluates its financial instruments, including its outstanding warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company has outstanding public and private warrants, both of which do not meet the criteria for equity classification and are accounted for as liabilities. Accordingly, the Company recognizes the warrants as liabilities at fair value and adjusts the warrants to fair value at each reporting period. The warrant liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the Company’s condensed consolidated statement of operations and comprehensive loss. The fair value of the public warrants is estimated based on the quoted market price of such warrants. The fair value of the private warrants is estimated using a binomial option pricing model. For the three months ended March 31, 2023 and 2022 the Company recorded a gain on change in fair value of the warrant liabilities of $1.4 million and nil, respectively.

Non-marketable Equity Securities

The Company’s non-marketable equity securities primarily comprise of shares of a privately held company which the Company received in 2021 as consideration for a licensing arrangement. The Company does not have significant influence over the privately held company and these equity securities do not have readily determinable fair values, as such the Company accounted for these equity securities using a measurement alternative in accordance with ASC 321, Investments—Equity Securities, which allows entities to measure these investments at cost, less any impairment, adjusted for changes from observable price changes in orderly transactions for identifiable or similar investments of the same issuer.

The Company determined that there were no transactions with observable prices related to the non-marketable equity securities, and that there were no indicators of impairment related to the non-marketable equity securities for the three months ended March 31, 2023.

Preferred Stock Redemption and Classification

The Series D-1 convertible redeemable preferred stock (the “Series D-1 Preferred Stock”) contained a liquidation preference whereby holders of the Series D-1 Preferred Stock were entitled to receive consideration equal to their original issue price plus all declared but unpaid dividends, prior to payment to the holders of other series of convertible preferred stock or the holders of common stock. As such, the holders of the Series D-1 Preferred Stock could receive cash entirely while the holders of subordinated equity instruments could receive nothing or cash plus other assets of the company, which is not the same form of consideration as the holders of the Series D-1 Preferred Stock. Likewise, the Series E Preferred Stock has a liquidation preference to the Series D Preferred Stock, Series C Preferred Stock, and Series B and Series A Preferred Stock. The Series D Preferred Stock has a liquidation preference to the Series C Preferred Stock, and Series B and Series A Preferred Stock. The Series C Preferred Stock has a liquidation preference to Series B and Series A Preferred Stock. The Series B and Series A Preferred Stock have a liquidation preference to the Common Stock.

The Series D-1 Preferred Stock was redeemable at a price per share equal to the original issue price of $4.5713 per share, plus an amount per share equal to 8% of the original issue price for each year following the original issue date, not more than 60 days after receipt of a written notice from a majority of the Series D-1 shareholders by the Company at any time on or after September 28, 2023.

As the preferred stockholders had the ability to control a majority of the votes of the board of directors, a deemed redemption could have occurred that was in the control of the preferred stockholders and outside the control of the Company, and holders of common stock may not have received the same form of consideration as the holders of the preferred stock, the Company concluded that the preferred stock was redeemable at the option of the holder and should be classified in mezzanine equity on the condensed consolidated balance sheets. Upon consummation of the Business

12

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Combination Agreement on February 10, 2023, all series of Preferred Stock converted into common stock. Refer to Note 4. Reverse Recapitalization for more information.

Lease Accounting

The Company determines if an arrangement is a lease at inception. The Company’s operating lease agreements are primarily for real estate and are included within right-of-use assets, net, accrued expenses and other current liabilities, and other long-term liabilities on the condensed consolidated balance sheets. The Company elected the practical expedient to combine its lease and related non-lease components for all its leases. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Variable lease payments that do not depend on an index or rate are excluded from the ROU assets and lease liabilities and are recognized in the period in which the obligation for those payments is incurred. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. ROU assets also include any lease prepayments made and exclude lease incentives. Many of the Company’s lease agreements include options to extend the lease, which are not included in the Company’s minimum lease terms unless they are reasonably certain to be exercised. Rental expense for lease payments related to operating leases is recognized on a straight-line basis over the lease term.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) to replace the incurred loss impairment methodology under current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted ASU 2016-13 on January 1, 2023 which did not have a material impact on its condensed consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments. This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. ASU 2020-06 is effective for private companies’ fiscal years beginning after December 15, 2023, respectively, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is currently evaluating the timing of adoption and the impact of this ASU on its condensed consolidated financial statements.

2.    Balance Sheet Components

Inventories

Inventories consisted of the following (in thousands):

	March 31, 2023		December 31, 2022
Raw materials	$	2,986	$	2,758
Work-in-progress	1,231		1,132
Finished goods	2,353		1,274
	$	6,570	$	5,164

The amount recorded as charges to cost of revenues, representing inventories considered obsolete and unsaleable was insignificant for the three months ended March 31, 2023 and 2022.

13

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following (in thousands):

	March 31, 2023		December 31, 2022
Prepaid and financed insurance	$	1,513	$	—
Prepaid expenses	1,409		1,029
Value added tax receivable	900		446
Contract assets	—		197
Vendor prepaid	287		—
Government tax receivables	1,419		1,416
Other assets	129		186
	$	5,657	$	3,274

Property and equipment, net

Property and equipment, net consists of the following (in thousands):

	March 31, 2023		December 31, 2022
Office equipment	$	157	$	157
Computer hardware and software	2,081		2,017
Lab equipment	2,802		2,864
Furniture and fixtures	553		545
Leasehold improvements	1,087		1,069
Gross book value	6,680		6,652
Less: accumulated depreciation and amortization	(4,318)		(4,291)
	$	2,362	$	2,361

Depreciation and amortization expense on property and equipment were $0.2 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively.

Accrued expenses and other current liabilities

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

	March 31, 2023		December 31, 2022
Accrued compensation and employee benefits	$	2,189	$	2,999
Accrued professional services	1,243		1,909
Financed insurance	912		—
Accrued valued added and other taxes	508		399
Accruals for purchases received	607		751
Current operating lease liabilities	483		593
Accrued TAS legal settlement	—		325
Other current liabilities	1,414		968
	$	7,356	$	7,944

14

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

3.    Fair Value Measurements

The Company categorizes assets and liabilities recorded at fair value on the Company’s condensed consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:

•Level 1—Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

•Level 2—Inputs are quoted prices for similar assets and liabilities in active markets or inputs other than quoted prices that are observable for the assets or liabilities, either directly or indirectly through market corroboration, for substantially the full term of the financial instruments.

•Level 3—Inputs are unobservable inputs based on the Company’s own assumptions used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

The carrying amount of the Company’s financial instruments including cash and cash equivalents, accounts receivable, and accounts payable approximate their respective fair values because of their short maturities, the Venture Linked Notes are carried at fair value due to the Company's election of the ASC 825 fair value option, while the convertible notes and the deferred payout owed to the sellers of Kinduct were carried at amortized cost, with the convertible notes adjusted for changes in fair value of the embedded derivative. As of March 31, 2023 and December 31, 2022, the carrying amount of the Venture Linked Notes was $42.9 million and zero, respectively. Refer to Note 5. Debt for additional information on the Venture Linked Notes.

The following table sets forth the Company’s financial assets and liabilities that were measured at fair value, on a recurring basis as of March 31, 2023 (in thousands):

	March 31, 2023
	Level 1		Level 2		Level 3		Total
Financial Assets
Cash equivalents
Money market funds	$	50,119	$	—	$	—	$	50,119
Total assets	$	50,119	$	—	$	—	$	50,119
Financial Liabilities
Venture Linked Notes	$	—	$	—	$	42,874	$	42,874
Public warrants	876		—		—		876
Private warrants	—		637		—		637
Total liabilities	$	876	$	637	$	42,874	$	44,387

15

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

The following table sets forth the Company’s financial assets and liabilities that were measured at fair value, on a recurring basis as of December 31, 2022 (in thousands):

	December 31, 2022
	Level 1		Level 2		Level 3		Total
Financial Assets
Cash equivalents
Money market funds	$	11	$	—	$	—	$	11
Marketable equity securities	2		—		—		2
Total assets	$	13	$	—	$	—	$	13
Financial Liabilities
Pre-Close Notes	$	—	$	—	$	25,300	$	25,300
Embedded derivative in convertible notes	—		—		60		60
Total liabilities	$	—	$	—	$	25,360	$	25,360

Level 1 instruments include highly liquid money market funds classified as cash equivalents and the public warrants. The Company utilized the market approach and Level 1 valuation inputs to value its money market mutual funds and the public warrants. As of March 31, 2023 and December 31, 2022, the carrying amount of cash equivalents approximated fair value due to the short period of time to maturity. The estimated fair value of the available-for-sale marketable equity securities may not be representative of values that will be realized in the future.

Level 2 instruments include the Private warrants, whose fair value is primarily determined using quoted prices for the Public warrants.

Level 3 instruments include the Venture Linked Notes and the warrant liabilities assumed in connection with the Business Combination Agreement.

Public Warrants

The fair value of the public warrants is estimated based on the quoted market price of such warrants on the valuation date. The public warrants were initially recognized as a liability in connection with the Business Combination on February 10, 2023 at a fair value of $1.8 million. As of March 31, 2023, the estimated fair value of the public warrants was $0.9 million. The non-cash gain of $0.9 million resulting from the change in fair value of the public warrants between February 10, 2023, and March 31, 2023 is recorded in change in fair value of warrant liabilities in our consolidated statements of operations and comprehensive loss during the three months ended March 31, 2023.

Private Placement Warrants

The private placement warrants were initially recognized as a liability in connection with the Business Combination on February 10, 2023 at a fair value of $1.1 million and was primarily determined based on the quoted price of the public warrants. As of March 31, 2023, the estimated fair value of the private placement warrants was $0.6 million. The non-cash gain of $0.5 million resulting from the change in fair value of the private placement warrants between February 10, 2023, and March 31, 2023 is recorded in change in fair value of warrant liabilities in our consolidated statements of operations and comprehensive loss during the three months ended March 31, 2023.

Venture Linked Notes

The Company elected the fair value option per ASC 825 for the Venture Linked Notes, accordingly the estimated fair value of the Venture Linked Notes at March 31, 2023 was determined using a binomial lattice model with significant assumptions including Movella's stock price, dividend yield, expected volatility, the risk-free rate, the discount rate, the term of the instrument, and lattice model inputs such as movement up or down and the probability of such movements. Changes in the fair value of the Venture Linked Notes and Pre-Close Notes totaling a net gain of $31.9 million and zero for the three months ended March 31, 2023 and 2022 are included in the Company’s consolidated statement of operations within other income (expense), net within the caption “Revaluation of debt, net”. As of March 31, 2023, the $75.0 million

16

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

principal amount of Venture Linked Notes had a fair value of $42.9 million. The fair value of the Venture Linked Notes was determined using a binomial lattice model with the following key assumptions:

	March 31, 2023		February 10, 2023
Term	4.9 years		5.0 years
Stock price	$1.36 per share		$8.58 per share
Dividend yield	—	%	—	%
Expected volatility	67.5	%	67.5	%
Risk-free rate	3.7	%	3.9	%
Risky rate	26.6	%	25.6	%
Movement up	1.15		1.15
Movement down	0.87		0.87
Probability up	47.1	%	47.1	%
Probability down	52.9	%	52.9	%

There were no transfers between fair value measurement levels during any presented period.

4.    Reverse Recapitalization

On February 10, 2023, Movella and Pathfinder consummated the transactions contemplated by the Business Combination Agreement. In connection with the Closing, each share of preferred stock of Legacy Movella was converted into common stock and, immediately thereafter, each share of common stock of Legacy Movella that was issued and outstanding immediately prior to the effective time of the Business Combination (other than excluded shares as contemplated by the Business Combination Agreement) was canceled and converted into the right to receive approximately 0.4887 shares (the “Exchange Ratio”) of New Movella common stock. At the Closing, each option to purchase Legacy Movella’s common stock, whether vested or unvested, was assumed and converted into an option to purchase a number of shares of New Movella common stock in the manner set forth in the Business Combination Agreement.

On November 14, 2022, Movella, Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent, and FP Credit Partners Phoenix II, L.P. and FP Credit Partners II, L.P., as purchasers (the “FP Purchasers”), entered into a Note Purchase Agreement (the “Note Purchase Agreement”) pursuant to which, (a) Movella issued and sold to the FP Purchasers, and the FP Purchasers purchased, the Pre-Close Notes and (b) subject to the fulfillment of certain conditions precedent (including the consummation of the Merger), Movella agreed to issue and sell to the FP Purchasers, and the FP Purchasers agreed to purchase, on the Closing Date, the Venture Linked Notes, in each case, for the consideration, as set forth in the Note Purchase Agreement.

In exchange for the entry into a Transaction Support Agreement for the FP Shares, pursuant to which the FP Purchasers agreed to, among other matters, refrain from redeeming the FP Shares (outside of certain circumstances), the Note Purchase Agreement provides that Movella issued and FP purchased notes evidencing the Venture Linked Notes, the deemed proceeds of which were used to, among other things, refinance the Pre-Close Notes in their entirety. Pursuant to the Venture Linked Notes, Movella Holdings has the right, subject to certain exceptions, to cause FP to sell all or a portion of the FP Shares at any time at its sole discretion over the life of the Venture Linked Notes, and a percentage of the proceeds (which percentage is a function of when proceeds are generated, based on a predetermined schedule with a sliding scale) of any such sale shall be applied as a credit against the outstanding obligations under the Venture Linked Notes upon repayment of the Venture Linked Notes in full or a refinancing event. The Venture Linked Notes will mature five years after the Closing Date.

On December 5, 2022, the FP Purchasers commenced (within the meaning of Rule 14d-2 promulgated under the Exchange Act) the Tender Offer. On the terms and subject to the conditions set forth in the Offer to Purchase and Letter of Transmittal, each dated as of December 5, 2022, the Tender Offer was due to expire at 11:59 p.m., Eastern Time, on January 4, 2023 (the “Expiration Time”). Prior to the Expiration Time, on January 4, 2023, the FP Purchasers irrevocably and unconditionally terminated the Tender Offer. As a result of this termination, no Class A ordinary shares were purchased in the Tender Offer, all Class A ordinary shares previously tendered and not withdrawn were promptly returned to tendering holders, and FP purchased 7.5 million shares of New Movella Common Stock in the FP Private Placement.

17

MOVELLA HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

In connection with the Note Purchase Agreement, Pathfinder and the FP Purchasers entered into an agreement (the “Equity Grant Agreement”) that provides for the issuance of 1.0 million shares of New Movella Common Stock by New Movella to the FP Purchasers on the Closing Date, subject to and conditioned upon the Merger occurring, and the full deemed funding of the Venture Linked Notes and the acquisition by the FP Purchasers or its affiliates of 7.5 million shares of New Movella Common Stock in the FP Private Placement. As the issuance of the 1.0 million shares under the Equity Grant Agreement was negotiated by Pathfinder concurrently with the Note Purchase Agreement and represents an obligation of Pathfinder as of the Closing, Pathfinder recognized the expense associated with the fair value of the issuance of these shares immediately prior to the consummation of the Merger. In connection with the Merger, New Movella assumed all issued and outstanding Pathfinder ordinary shares and converted the Pathfinder ordinary shares to shares of New Movella, as described further below.

The Company accounted for the Business Combination as a reverse recapitalization whereby Legacy Movella was determined as the accounting acquirer and Pathfinder as the accounting acquiree. Refer to Note 1. Overview and Summary of Significant Accounting Policies, for further details. Accordingly, the Business Combination was treated as the equivalent of Legacy Movella issuing stock for the net assets of Pathfinder, accompanied by a recapitalization. The net assets of Pathfinder are stated at historical cost, with no goodwill or other intangible assets recorded.

Upon the closing of the Transactions and the issuance of the Venture Linked Notes, the Company received total gross proceeds of $111.0 million, which consisted of $36.0 million from Pathfinder’s trust and $75.0 million from the Venture Linked Notes. Such gross proceeds were offset by $27.5 million of transaction costs, which principally consisted of advisory, legal and other professional fees, and were allocated to the fair value of the equity issued on the Closing Date, as detailed below, and the Venture Linked Notes and Pathfinder warrants on a relative fair value basis. The transaction costs allocated to the equity issued on the Closing Date were accounted for as a reduction in additional paid-in capital, and the transaction costs allocated to the Venture Linked Notes and Pathfinder warrants were expensed immediately on the Closing Date. Debt repayments, inclusive of accrued but unpaid interest, of $25.6 million were paid in conjunction with the Closing, which consisted of a $25.6 million repayment of the Pre-Close Notes.

Upon the consummation of the Merger, New Movella adopted a single class stock structure pursuant to which the following events contemplated by the Business Combination Agreement occurred, based on Legacy Movella’s capitalization as of February 10, 2023:

•All 56,361,224 issued and outstanding shares of Legacy Movella redeemable convertible preferred stock were converted into 56,438,820 shares of Legacy Movella common stock at the conversion rate as calculated pursuant to Legacy Movella’s certificate of incorporation;

•All of the outstanding principal and accrued interest on the convertible notes of Legacy Movella were converted into 1,333,712 shares of Legacy Movella common stock at the conversion rate as calculated pursuant to the terms of each of the Legacy Movella convertible notes;

•All 596,435 issued and outstanding warrants of Legacy Movella were net exercised in exchange for 546,056 shares of Legacy Movella common stock pursuant to the terms of the applicable warrant agreement;

•All 71,077,736 issued and outstanding shares of Legacy Movella common stock (including 12,759,148 shares of Legacy Movella common stock,