VFS

Business Context and Reporting Period

This Form 20-F is a Shell Company Report filed by VinFast Auto Ltd. on August 14, 2023, following the completion of its business combination with Black Spade Acquisition Co. The filing details the transition from a private Singapore entity to a public company listed on the Nasdaq Stock Market under the symbols "VFS" (ordinary shares) and "VFSWW" (warrants). The report incorporates financial data for the fiscal years ended December 31, 2021 and 2022, and the three months ended March 31, 2023.

Key Financial Metrics

Revenue and Profitability (Three Months Ended March 31, 2023):

• Total Revenue: VND 1,971.6 billion (approx. USD 83.5 million).
• Gross Loss: VND 3,808.8 billion (approx. USD 161.4 million).
• Operating Loss: VND 11,142.3 billion (approx. USD 472.1 million).
• Net Loss: VND 14,120.8 billion (approx. USD 598.3 million).
• Loss Per Share: VND 6,127 (approx. USD 0.26).

Balance Sheet Position (As of March 31, 2023):

• Total Assets: VND 120.1 billion (approx. USD 5.1 billion).
• Cash and Cash Equivalents: VND 3,740.8 billion (approx. USD 158.5 million).
• Total Liabilities: VND 170.9 billion (approx. USD 7.2 billion).
• Long-Term Debt: VND 56.7 billion (approx. USD 2.4 billion), comprising interest-bearing loans and financial liabilities.
• Accumulated Deficit: VND 141.3 billion (approx. USD 5.99 billion).

Cash Flow (Three Months Ended March 31, 2023):

• Operating Cash Flow: Net cash used of VND 19.2 billion (approx. USD 811.8 million).
• Investing Cash Flow: Net cash used of VND 6.1 billion (approx. USD 259.8 million).
• Financing Cash Flow: Net cash provided of VND 25.4 billion (approx. USD 1.08 billion), driven by proceeds from borrowings.

Material Changes vs. Prior Period

Revenue Decline: Revenue for the three months ended March 31, 2023, decreased significantly to VND 1,971.6 billion compared to VND 3,878.4 billion in the same period of 2022. This decline is primarily attributed to the cessation of internal combustion engine (ICE) vehicle sales and a strategic shift to electric vehicles (EVs), alongside a reduction in smartphone sales.

Widening Losses: The net loss for the quarter increased to VND 14.1 billion in 2023 from VND 9.7 billion in 2022. This was driven by a higher gross loss (VND 3.8 billion vs. VND 2.6 billion) and increased operating expenses, particularly in Research and Development (VND 5.0 billion vs. VND 3.6 billion).

Capital Structure: The company completed a share consolidation on August 1, 2023, reducing outstanding shares from approximately 2.41 billion to 2.30 billion. Additionally, the company issued 1.64 million ordinary shares to a backstop subscriber for $16.4 million in connection with the business combination.

Guidance, Outlook, and Risks

Outlook and Capital Needs: Management states that VinFast is a growth-stage company with a history of losses and negative operating cash flows. The company expects to require significant additional capital to support business growth, which it plans to fund through additional debt and equity financing. There is no assurance that such capital will be available on commercially reasonable terms.

Key Risks:

• Going Concern: The company has accumulated losses of VND 141.3 billion and a net current liability position. Continued operations depend on financial support from Vingroup and successful external financing.
• Internal Controls: VinFast has identified material weaknesses in its internal control over financial reporting. Failure to remediate these could impair the ability to produce accurate financial statements.
• Market Entry: As a new entrant in the global EV market, the company faces risks regarding brand acceptance, competition, and the ability to meet production targets outside of Vietnam.
• Supply Chain: The company relies heavily on suppliers for components and raw materials; any disruption could materially affect operations.
• Related Party Dependence: VinFast relies on Vingroup for financial support and key business aspects. Conflicts of interest or adverse events affecting Vingroup could impact VinFast.

Investor Verification Checklist

• Capital Adequacy: Verify the sufficiency of current cash reserves (approx. USD 158.5 million) against the high burn rate and upcoming capital expenditure requirements for US and European expansion.
• Internal Control Remediation: Review the specific steps management is taking to address the identified material weaknesses in internal controls over financial reporting.
• Related Party Transactions: Scrutinize the volume and terms of transactions with Vingroup and its affiliates, which constitute a significant portion of borrowings and operational support.
• Production vs. Reservations: Distinguish between vehicle reservations and actual delivered sales, as the filing notes reservations may not result in completed sales.
• Debt Covenants: Assess the impact of debt covenants, particularly regarding collateral cover ratios, which have previously required the addition of assets to remain compliant.