Sono Group N.V. 10-K

Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures As of the end of the period covered by this Annual Report, our management team, with the participation of our principal executive officer and principal financial officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that, due to the unremediated material weakness in our internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of December 31, 2024. Management ’ s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Our management assessed the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission. 74 In previous years' audits, the material weaknesses that were identified relate to: (i) a lack of consistent and proper application of processes and procedures; (ii) the design and operating effectiveness of information technology general controls for information systems that are significant to the preparation of our consolidated financial statements; (iii) a lack of review and supervision; (iv) the sufficiency of resources with an appropriate level of technical accounting and SEC reporting experience; and (v) clearly defined control processes, roles and segregation of duties within our finance and accounting functions. In 2023, certain measures that were planned in order to remedy such material weaknesses could not be implemented as planned as a result of the Self-Administration Proceedings. In light of the Companies’ successful emergence from their respective Self-Administration Proceedings and the restructuring/recapitalization of our businesses, we are currently planning measures to remedy such material weaknesses. Beginning January 1, 2025, the planned remedial measures began with the hiring of additional accounting staff and the appointment of a new chief financial offer who possess the requisite skills to address technical accounting and reporting issues and implement processes that include taking steps to improve our controls and procedures. We continue to devote attention to remediating the aforementioned deficiencies and specifically plan to incorporate automated and software-based accounting tools, engage third parties to support our internal resources related to accounting and internal controls, implement ongoing internal training for our accounting and finance teams and continue to invest in our finance IT systems. However, as of December 31, 2024, we are still in the process of remediating the previously identified material weaknesses. Based upon the above evaluation, management, including our Chief Executive Officer and Chief Financial Officer, concluded that our internal control over financial reporting was not effective as of December 31, 2024, due to the presence of multiple material weaknesses as described above. Notwithstanding these material weaknesses, our management, based on the substantial work performed, concluded that our consolidated financial statements for the periods covered by and included in this Annual Report are fairly stated in all material respects in accordance with U.S. GAAP. Attestation Report of the Registered Public Accounting Firm This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm because, as an “emerging growth company”, we are exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting that occurred during the quarter ended December 31, 2024 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting. Limitations on Effectiveness of Disclosure Controls and Procedures We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs. 75 Item 9B. Other Information. During the quarter ended December 31, 2024, none of our directors or officers (as defined in Section 16 of the Exchange Act) adopted or terminated a “Rule 10b5 - 1 trading arrangement” or a “non-Rule 10b5 - 1 trading arrangement” (each as defined in Items 408 (a) and (c) of Regulation S-K). Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 76 PART III Item 10. Directors, Executive Officers and Corporate Governance. Directors and Executive Officers We have a two-tier board structure consisting of a management board ( bestuur ) and a supervisory board ( raad van commissarissen ). Supervisory Board Our supervisory board is currently composed of three members. Our supervisory board may adjust the number of supervisory board members from time to time. Our supervisory board members do not have a retirement age requirement under our articles of association. Set forth below are the names and certain information about each of the members of our supervisory board as of the date of this Annual Report. Biographical information for each supervisory board member is included below the table. Name Positions and Offices Held Term Served Year in which Term Expires Age David Dodge Supervisory Board Member 2024 - Present 2026 50 Christopher Schreiber Supervisory Board Member 2024 - Present 2026 60 Owen May Supervisory Board Member 2024 - Present 2026 66 David A. Dodge was appointed as an independent member of our supervisory board on January 31, 2024. Mr. Dodge is an independent financial consultant providing corporate finance, accounting and SEC compliance services to public and private companies around the globe. Since 2007, Mr. Dodge has acted as a chief financial officer and provided financial accounting, reporting and compliance services for multiple public and private companies in the U.S., Canada, England and China. Mr. Dodge also supervised and authored dozens of forensic due diligence investigative reports on Chinese companies in a variety of industries. He has also provided expert witness and expert consultant services in nearly 40 separate litigation proceedings on a variety of financial topics, including due diligence standard of care for underwriters (in transactions including IPOs, equity follow-on offerings and debt offerings), mergers & acquisitions and private equity and venture capital investments; customary practices in the investment banking industry; and customary practices in the private equity and venture capital businesses. Mr. Dodge previously served as Chief Financial Officer of NeoMedia Technologies, Inc. from 2002 through 2007, and held various finance-related positions with NeoMedia from 1999 to 2002. Before NeoMedia, he was an auditor with Ernst & Young LLP from 1997 to 1999. Mr. Dodge holds a B.A. in Economics from Yale University and an M.S. in Professional Accounting from the University of Hartford (CT). Christopher Schreiber was appointed as an independent member of our supervisory board on January 31, 2024. Mr. Schreiber has over three decades of experience in the securities industry. His expertise is demonstrated by his previous executive roles, notably as Executive Chair of the board of directors at Akers Bio and as a Board Member at MyMD Pharmaceuticals, Inc. (NASDAQ: MYMD). His role as Managing Director of Capital Markets at Taglich Brothers, Inc. highlights his extensive experience in capital markets, deal structuring and syndication. Prior to his engagement at Taglich Brothers, Mr. Schreiber served on the board of directors of Paulson Investment Company, an investment banking firm. In addition to his financial career, Mr. Schreiber contributes to athletic and youth development as a director and partner at Long Island Express North, an elite lacrosse training organization, and as a volunteer board member for Fox Lane Youth Lacrosse. He is a graduate of Johns Hopkins University with a Bachelor’s Degree in political science. 77 Owen May was appointed as an independent member of our supervisory board on November 7, 2024. Mr. May is a dynamic and results-driven executive with over three decades of experience in financial advisory, mergers & acquisitions and strategic business development. As the Chief Executive Officer and founder of MD Global Partners, Mr. May has consistently delivered growth through innovative financial strategies and capital market expertise. Under his leadership, the firm has become a leading financial services company, specializing in capital raising, corporate restructuring and M&A advisory. Since founding MD Global Partners in 2005, Mr. May has spearheaded the company’s expansion into new markets and overseen significant revenue growth. In addition to his role at MD Global Partners, Mr. May serves as a Board Director for organizations such as Syredix Bio, Curzon Energy PLC and the New York Society for the Prevention of Cruelty to Children (NYSPCC). He is also an Emeritus member of the Board of Visitors at the Fuqua School of Business, Duke University and a member of the President's Council at the University of Miami. Mr. May holds a Bachelor’s Degree in biology from the University of Miami and a Master’s of Business Administration from Duke University’s Fuqua School of Business. Our Executive Officers Set forth below are the names and certain information about each of our executive officers as of the date of this Annual Report. Biographical information for each executive officer is included below the table. Name Positions and Offices Held Term Served Year in which Term Expires Age George G. O’Leary (1) Chief Executive Officer 2024 - Present 2026 62 Martin Scott Calhoun Chief Financial Officer 2024 - Present N/A(2) 60 (1) Mr. O’Leary was suggested as a candidate for the Company’s management board by Yorkville, as contemplated under the terms of the Yorkville Investment Agreements. Mr. O’Leary’s appointment to the management board was approved by shareholders at the January 2024 EGM, following his nomination by the Company’s former supervisory board. (2) On December 30, 2024, Mr. Calhoun was appointed the Chief Financial Officer of the Company on a preliminary basis, subject to termination by either party upon 30 days’ prior notice. We expect to enter into an agreement with Mr. Calhoun for a longer term, subject to the Company successfully meeting the requirements for an initial listing of the Ordinary Shares on the Nasdaq Capital Market. George O ’ Leary has served as the Chief Executive Officer of the Company on a full-time basis since April 8, 2024. From April 8, 2024 through December 29, 2024, Mr. O’Leary also served as the Chief Financial Officer of the Company. He was appointed to the management board with effect as of February 1, 2024. Mr. O’Leary is currently a Member of the board of directors of HealthLynked Corporation (“HLYK”) (OTCQB: HLYK) and served as HLYK’s Chief Financial Officer from August 6, 2014 through April 5, 2024. In addition, Mr. O’Leary was the Vice Chairman of the board of directors of Timios Holdings Corp. from March 2014 to January 2021, when it was sold to Ideanomics Inc. (NASDAQ: IDEX), and has served as Vice Chairman of the board of directors of Referrizer, LLC since October 2017. Mr. O’Leary is the founder and President of SKS Consulting of South Florida Corp. since June 2006, where he works with public and private companies in board representation and/or under consulting agreements, providing executive-level management expertise and helping with the implementation and execution of the companies’ strategic and operational plans. From 1996 to 2000, Mr. O’Leary was Chief Executive Officer and President of Communication Resources Incorporated (“CRI”), where annual revenues grew from $5 million to $40 million during his tenure. Prior to CRI, Mr. O'Leary was Vice President of Operations of Cablevision Industries, where he ran $125 million of business until it was sold to Time Warner. Mr. O’Leary started his professional career as a senior accountant with Peat Marwick and Mitchell (now KPMG). Mr. O’Leary holds a B.B.A. degree in accounting with honors from Siena College. Martin Scott Calhoun has served as the Chief Financial Officer of the Company since December 30, 2024. Mr. Calhoun is the founder of Cross Roads Consulting, LLC, established in December 2008, where he provided outsourced CFO services and technical accounting support for public companies, including SEC filings, financial modeling and valuation analyses. Previously, he held senior roles including Director of Financial Planning and Analysis at NeoMedia Technologies and Assistant Director of Finance at Tampa Sports Authority, overseeing financial reporting, regulatory compliance and audits. Mr. Calhoun is a Certified Public Accountant (CPA), Certified Valuation Analyst (CVA) and holds an MBA. He began his career as an auditor with Pannell Kerr Forster, CPAs. 78 Family Relationships There are no family relationships among any of our executive officers or directors. Code of Business Conduct and Ethics We have adopted a code of business conduct and ethics which outlines the principles of legal and ethical business conduct under which we will do business. The code of business conduct and ethics includes a provision that provides for a process by which employees, officers and supervisory board members can report potential irregularities. The code of business conduct and ethics also provides protection from retaliation or discrimination by the Company against whistleblowers due to reporting issues relating to compliance with applicable laws and regulations. This code applies to all of our employees, officers and supervisory board members. Our code of business conduct and ethics is available on our website at https://ir.sonomotors.com/static-files/00c5ecac-444c-471f-b3d9-58d10d8788c5 . Our website and its contents are not incorporated into this Annual Report. We intend to make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of business conduct and ethics on our website rather than by filing a Current Report on Form 8-K. Insider Trading Policies and Procedures The Company has adopted an insider trading policy and procedures governing the purchase, sale and/or other dispositions of the Company’s securities that applies to all supervisory board members, officers, employees and certain other persons, as well as to the Company and the Subsidiary. It is also the Company’s policy to take appropriate steps to comply with applicable federal and state securities laws and regulations, as well as applicable OTCQB standards, when the Company engages in transactions in the Company’s securities. The Company believes that its insider trading policy and procedures are reasonably designed to promote compliance with insider trading laws, rules and regulations applicable to the Company. A copy of the Company’s insider trading policy is filed as Exhibit 19.1 to this Annual Report. Supervisory Board Nomination Process Qualified candidates will be considered without regard to race, color, religion, sex, ancestry, national origin or disability. The supervisory board has the authority to nominate candidates for the supervisory board, with such authority delegated to the nomination and corporate governance committee, which shall act in accordance with its charter. The nomination and corporate governance committee does not have a formal policy with respect to candidates recommended by shareholders. The supervisory board may consider or decline to consider a candidate if it determines doing so is in the best interest of the Company. If the nomination and corporate governance committee approves a candidate for further review, they will establish an interview process for the candidate. The nomination and corporate governance committee will also take into consideration the candidate’s personal attributes, including, without limitation, personal integrity, loyalty, ability to apply sound and independent business judgment, awareness of a supervisory board member’s vital role in our good corporate citizenship and image, time available for meetings and consultation on our matters and willingness to assume broad, fiduciary responsibility. Audit Committee The audit committee currently consists of the entire supervisory board, with Mr. Dodge serving as chairperson. The audit committee assists the supervisory board in, among other things: ● overseeing the Company’s accounting, financial reporting and internal controls processes; 79 ● overseeing the Company’s compliance with legal and regulatory requirements, as well as the operation of the code of business conduct and ethics and other internal policies; ● overseeing the selection, qualifications, independence and performance of the Company’s independent registered public accounting firm; and ● pre-approving of all permitted non-audit services to be performed by the independent registered public accounting firm. The audit committee has the authority to retain independent counsel and advisors to assist in carrying out its responsibilities. Each member of the audit committee is an “independent director,” as such term is defined in the OTCQB Rules and meets the criteria for independence set forth in Rule 10A-3(b)(1) under the Exchange Act. The supervisory board has determined that each of the audit committee members is able to read and understand fundamental financial statements and that at least one member of the audit committee has past employment experience in finance or accounting. The supervisory board has also determined that Mr. Dodge qualifies as an “audit committee financial expert,” as such term is defined in the rules of the SEC. Item 11. Executive Compensation. Executive Compensation Our named executive officers (collectively, the “Named Executive Officers” or “NEOs”) for the year ended December 31, 2024 are: ● George O’Leary, our Chief Executive Officer ● Martin Scott Calhoun, our Chief Financial Officer ● Laurin Hahn; our former co-Chief Executive Officer; ● Jona Christians; our former co-Chief Executive Officer; and ● Torsten Kiedel, our former Chief Financial Officer. There were no other executive officers of the Company serving at the end of 2024. On January 30, 2024, as contemplated under the agreements related to the Yorkville Restructuring Investment, all Pre-Restructuring Managing Directors (as defined herein) resigned from the Company’s management board, effective January 31, 2024. At the January 2024 EGM, George O’Leary was appointed to the management board, effective as of the close of the January 2024 EGM, and assumed the roles of part time Chief Executive Officer (“CEO”) and Chief Financial Officer of the Company (“CFO”). On April 8, 2024, Mr. O’Leary assumed the above roles on a full-time basis. On December 30, 2024, the Company’s management board and supervisory board approved the appointment of Martin Scott Calhoun, the Company’s then-current Controller, as Chief Financial Officer of the Company. Consequently, George O’Leary, in preparation for its uplisting to the Nasdaq Capital Market, replaced himself as Chief Financial Officer while continuing to serve as Managing Director and Chief Executive Officer. In addition, the Summary Compensation Table below includes information on (i) two additional individuals, Laurin Hahn and Jona Christians, who were not serving as executive officers of the Company at the end of 2024, but who both previously served as our former co-Chief Executive Officers and who resigned from such positions effective January 31, 2024, and (ii) one additional individual, Torsten Kiedel, our former Chief Financial Officer, who resigned from such position effective January 31, 2024, but was among our next two most highly compensated officers during 2024 (other than our CEO). 80 The Summary Compensation Table below provides information regarding compensation awarded to, earned by or paid to our NEOs for the years ended December 31, 2024 and December 31, 2023, as applicable. Summary Compensation Table Name and Principal Position Year Salary Bonus All Other Compensation (1) Total ($) ($) ($) ($) George O’Leary (2) 2024 391,075 100,000 (3) 35,000 526,075 Chief Executive Officer Martin Scott Calhoun (4) 2024 38,850 – – 38,850 Chief Financial Officer Laurin Hahn (5) 2024 – – – – former co-Chief Executive Officer 2023 39,013 (6) – – 39,013 (6) Jona Christians (5) 2024 5,051 (7) – 699 (7) 5,750 (7) former co-Chief Executive Officer 2023 60,553 (6) – 545 (6) 61,098 (6) Torsten Kiedel (5) 2024 21,646 (7) – – 21,646 (7) former Chief Financial Officer 2023 256,185 (6) – 9,500 (6) 265,685 (6) __________________________ (1) All other compensation for NEOs other than Mr. O’Leary includes the value of employer-paid health insurance premiums, compensation for unused vacation days and contributions to social security insurance, if any. For Mr. O’Leary, the amount reported in this column consists of a $35,000 healthcare allowance provided by the Company to Mr. O’Leary during 2024. (2) Mr. O’Leary first assumed the roles of CEO and CFO on January 31, 2024, initially on a part-time basis until his full-time assumption of the roles on April 8, 2024. Mr. O’Leary, in preparation of the Company’s uplisting to the Nasdaq Capital Market, replaced himself as CFO on December 30, 2024. Mr. O’Leary’s compensation for the year ended December 31, 2024 includes compensation for his service as CEO and CFO. (3) In January 2025, the supervisory board determined, based on our performance, a bonus payout of $100,000 for Mr. O’Leary with respect to his 2024 incentive bonus, with 65% of the bonus payout being paid on February 18, 2025 and the remaining 35% of the bonus payout being paid upon the earlier of (i) the Company’s next funding event in excess of $1 million, or (ii) the Company’s successful uplisting to Nasdaq, subject to Mr. O’Leary remaining in continuous service with us through the payment date. (4) Mr. Calhoun first assumed the role of CFO on December 30, 2024. Prior to his service as CFO, beginning on October 1, 2024, Mr. Calhoun served as Controller for the Company. Mr. Calhoun’s compensation for the year ended December 31, 2024 includes compensation for his service as CFO and Controller. (5) Messrs. Hahn, Christians and Kiedel each resigned from their positions effective January 31, 2024. (6) Amounts shown were paid in Euros and, for purposes of the above table, were converted into United States dollars using the average European Central Bank exchange rate of 1.0813 for the year 2023. (7) Amounts shown were paid in Euros and, for purposes of the above table, were converted into United States dollars using the European Central Bank exchange rate of 1.0823 in effect on the date of payment, January 29, 2024. Narrative to Summary Compensation Table Our executive compensation program is designed to attract and retain high-caliber executives, incentivize performance and align management’s interests with those of our shareholders. Compensation for our NEOs consists primarily of base salary, discretionary bonuses and other compensation, including social security contributions or monetary benefits. ● Base salary: Fixed annual cash compensation based on role, experience and industry benchmarks. ● Bonus: Pursuant to his service agreement, for 2024, Mr. O’Leary was eligible for a target incentive bonus of $100,000, based upon the achievement of goals agreed with the supervisory board. In January 2025, the supervisory board determined, based on our performance, a bonus payout of $100,000 for Mr. O’Leary with respect to his 2024 incentive bonus with 65% of the bonus payout paid on February 28, 2025 and the remaining 35% of the bonus payout being paid upon the earlier of (i) the Company’s next funding event in excess of $1 million or (ii) the Company’s successful uplisting to Nasdaq, subject to Mr. O’Leary remaining in continuous service with us through the payment date. None of our other NEOs were eligible for an incentive bonus for 2024 service. ● All other compensation: Employer-paid health insurance premiums, compensation for unused vacation days and other customary employment-related benefits and contributions to social security insurance. In response to Item 402(x)(1) of Regulation S-K, we do not currently grant stock options, stock appreciation rights or similar option-like instruments to our NEOs or other employees or service providers. If in the future we anticipate granting stock options, stock appreciation rights or similar option-like instruments, we will establish a policy regarding how our management board determines when to grant such awards and how it will take material nonpublic information into account when determining the timing and terms of such awards. Service Agreements Current Named Executive Officers George O’Leary We entered into a full-time service agreement with Mr. George O’Leary on May 8, 2024 with an initial term of one year, with extensions approved by the supervisory board. The agreement entitles Mr. O’Leary to receive an annual base salary of $400,000, paid time off benefits and a monthly health insurance stipend. The agreement also provides for an incentive bonus payment targeted at 25% of Mr. O’Leary’s base salary, with payment based upon the achievement of certain goals as agreed with and approved by the Company’s supervisory board and subject to Mr. O’Leary remaining in continuous service with us through the applicable payment date. Either party may terminate the service agreement by giving the other party not less than 90 days’ notice; provided that the Company may terminate the agreement with immediate effect in connection with a termination for Cause (as defined in the agreement). If the Company terminates Mr. O’Leary without Cause during the initial term of the agreement, then, subject to Mr. O’Leary’s execution and non-revocation of a separation agreement and release of claims in form and substance acceptable to the Company and Mr. O’Leary’s continued compliance with all post-termination obligations to the Company, the Company shall provide severance payments to Mr. O’Leary equal to the base salary and 100% of the cash bonus that Mr. O’Leary would have received for the remainder of the initial term, with the minimum severance payment being equal to three (3) months of his base salary. If Mr. O’Leary is terminated without Cause during any extension period of the term of the agreement, then, subject to Mr. O’Leary’s execution and non-revocation of a separation agreement and release of claims in form and substance acceptable to the Company and Mr. O’Leary’s continued compliance with all post-termination obligations to the Company, the Company shall provide severance payments to Mr. O’Leary equal to three months of his base salary. Under the agreement, Mr. O’Leary is subject to confidentiality, non-disclosure, customer non-solicitation, employee non-solicitation, non-disparagement, intellectual property and assignment of inventions covenants in favor of the Company. M. Scott Calhoun We entered into a full-time service agreement with Mr. M. Scott Calhoun on December 30, 2024. This agreement entitles Mr. Calhoun to receive monthly salary payments of $15,000. Either party may terminate the service agreement by giving the other party not less than 30 days’ notice. The agreement does not provide for any severance payments in connection with the termination of Mr. Calhoun’s service. Former Named Executive Officers In connection with their separation in January 2024, no severance or other post-termination payments were made to Messrs. Hahn, Christians or Kiedel, and the Company waived the application of the non-competition covenants applicable to Messrs. Hahn, Christians and Kiedel under the terms of their respective employment agreements. Mr. Hahn received no compensation in 2024, and Mr. Christians received his accrued base salary for January and a payment for accrued unused vacation. Mr. Kiedel received compensation in 2024 pursuant to an agreement with the Company for his continued service as Managing Director during the month of January 2024. 81 Outstanding Equity Awards at Fiscal Year-End The following table shows all outstanding equity awards held by our NEOs as of December 31, 2024. Other than Mr. Kiedel, none of our other NEOs held any outstanding equity awards as of December 31, 2024. Option Awards Name Grant Date Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Option Exercise Price ($) Option Expiration Date Torsten Kiedel November 17, 2021 (1) 3,018 – $ 4.68 November 17, 2025 (1) Mr. Kiedel, our former Chief Financial Officer, held options originally granted under the Company’s Conversion Stock Option Program to purchase 132,350 Ordinary Shares at an exercise price of €0.06 per share, pursuant to the terms of his grant agreement. As of December 31, 2024, after giving effect to historical share adjustments, these options were exercisable for 3,018 Ordinary Shares at an adjusted exercise price of €4.50 per share, as reflected in the table above. For purposes of the table above, the option exercise price was converted into United States dollars using the European Central Bank exchange rate of 1.0389 in effect as of December 31, 2024. The share options were granted on the date of the Company’s IPO, November 17, 2021 (“Grant Date”), with a four-year expiration period and a one-year waiting period from the Grant Date before they became exercisable. Retirement Plan The Company does not sponsor a retirement plan for its NEOs or other employees. Our NEOs provide services under individual service agreements and are not eligible for a company-sponsored retirement or other pension benefits. Employees of our German subsidiary participate in statutory retirement programs in accordance with applicable German law. Clawback Policy In December 2023, our supervisory board adopted our a “clawback” policy, designed to comply with Rule 10D-1 of the Exchange Act and Nasdaq Listing Rule 5608, which provides for recoupment of incentive compensation in the event of an accounting restatement resulting from material noncompliance with financial reporting requirements under the relevant securities laws. The clawback policy applies to our current and former executive officers. Compensation that is granted, earned or vested based wholly or in part upon attainment of a financial reporting measure is subject to recoupment. Director Compensation Non-Executive Directors' Remuneration Our supervisory board was first established in 2021. As of February 1, 2024, the annual compensation package for services as a supervisory board member, including service on any committees of the supervisory board, consists of an annual retainer of $50,000. For the year ended December 31, 2024, the former members of the Company’s supervisory board received compensation for their services during the month of January 2024, based on the same annual compensation structure that was in effect during 2023, prorated for their period of service. For the year ended December 31, 2023, the annual compensation packages for services as a supervisory board member consisted of €50,000 for the chairperson, €40,000 for the vice-chairperson and €25,000 for each regular supervisory board member. In addition, for membership in the audit committee, the chairperson received an annual compensation of €20,000 and each other member an annual compensation of €10,000. For membership in the compensation committee, the chairperson received an annual compensation of €12,000 and each other member an annual compensation of €6,000. For membership in the nomination and corporate governance committee, the chairperson received an annual compensation of €8,000 and each other member an annual compensation of €4,000. The following table presents the total compensation for each person who served as a member of our supervisory board during the fiscal year ended December 31, 2024. Other than as set forth in the table and described more fully below, we did not pay any compensation, make any equity awards to or pay any other compensation to any of the members of our supervisory board in 2024. Supervisory board members are entitled to reimbursement for reasonable and documented travel and out-of-pocket expenses incurred in connection with their service as members of the supervisory board. Name Fees Earned or Paid in Cash Stock Awards Option Awards Total ($) ($) ($) ($) Current Supervisory Board Members (1) David Dodge 45,833 – – 45,833 Christopher Schreiber 45,837 – – 45,837 Owen May 8,333 – – 8,333 Former Supervisory Board Members (2) Sandra Vogt-Sasse 7,546 (3) – – 7,546 (3) Thomas Wiedermann 6,900 (3) – – 6,900 (3) Martin Sabbione 5,067 (3) – – 5,067 (3) Johannes Trischler 44,182 (3)(4) – – 44,182 (4) (1) At the January 2024 EGM, David Dodge and Christopher Schreiber were appointed as members of the Company’s supervisory board as of the close of the January 2024 EGM. At the November 2024 EGM, Owen May was appointed as members of the Company’s supervisory board as of the close of the November 2024 EGM. (2) On January 30, 2024, as contemplated in the agreements related to the Yorkville Restructuring Investment, all of the members of our former supervisory board – Sandra Vogt-Sasse, Thomas Wiedermann, Martin Sabbione and Johannes Trischler – resigned from their positions on the Company’s supervisory board with effect as of the end of January 31, 2024. (3) All 2024 director compensation payments to our former supervisory board members were made on January 26, 2024. Amounts shown were paid in Euros and, for purposes of the above table, were converted into United States dollars using the European Central Bank exchange rate of 1.0871 in effect on the date of payment, January 26, 2024. (4) Mr. Trischler’s 2024 director compensation as a member of the Company’s supervisory board was $3,773. This amount was paid in euros and, for purposes of the above table, has been converted into U.S. dollars using the European Central Bank exchange rate of 1.0871 in effect on the date of payment, January 26, 2024. In addition, Mr. Trischler was employed by the Company’s Subsidiary until his termination on April 30, 2024. As an employee, he received salary payments totaling $39,780 and compensation for unused vacation of $629, for a combined total of $40,409. These employment-related amounts were paid in euros and converted into U.S. dollars using the average European Central Bank exchange rate of 1.0825 for the period from January 1, 2024 through April 30, 2024. 82 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. Security Ownership of Certain Beneficial Owners and Management The following table sets forth information, as of March 24, 2025, regarding the beneficial ownership of our Ordinary Shares and our High Voting Shares known to us: ● each person, or group of affiliated persons, known by us to own beneficially 5% or more of our outstanding Ordinary Shares or High Voting Shares; ● each management board member, executive officer and supervisory board member; and ● all management board members, executive officers and supervisory board members as a group. Beneficial ownership is determined in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or investment power, as well as any shares that the individual has the right to acquire within 60 days of March 24, 2025 through the exercise of any option, warrant or other right. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares held by that person. The beneficial ownership of Ordinary Shares and High Voting Shares is based on 1,409,921 Ordinary Shares and 40,000 High Voting Shares issued and outstanding as of March 24, 2025. 83 Unless otherwise indicated below, the address for each beneficial owner listed is c/o Sono Group N.V., Waldmeisterstraße 93, 80935 Munich, Germany. Ordinary shares High voting shares Name of beneficial owner Number Percent Number Percent Combined voting power 5% Shareholders SVSE LLC (1) 230,751 16.4% 40,000 100% 51.1% Bambino 255. V V UG (2) 177,417 12.6% – – 7.4% Executive Officers and Directors David Dodge – – – – – Christopher Schreiber – – – – – Owen May – – – – – George O’Leary (1) 230,751 16.4% 40,000 100% 51.1% Martin Scott Calhoun – – – – – All current executive officers and directors as a group (5 persons) 230,751 16.4% 40,000 100% 51.1% (1) George O’Leary was appointed Managing Director, CEO and CFO of Sono Group N.V. at the January 2024 EGM. He is the sole member of SVSE, which is the holder of record of the Ordinary Shares and High Voting Shares presented. The securities held by SVSE are subject to a pledge agreement, dated February 5, 2024, by and between SVSE and Yorkville, pursuant to which the securities would accrue to Yorkville in the event that the Company defaults on certain of its payment obligations to Yorkville. If Yorkville and SVSE enter into the Call Option Agreement, as currently intended, the Call Option would enable Yorkville, at its discretion, to purchase all of the Ordinary Shares and High Voting Shares held by SVSE in one or more transactions prior to the Expiration Time, subject to certain limitations. (2) Based on a Schedule 13D filed with the SEC on June 14, 2024, Bambino 255. V V UG beneficially owns 177,417 of our Ordinary Shares (after giving effect to the Reverse Share Split), and has sole and dispositive power with respect to all of such shares. The address of Bambino 255. V V UG’s principal address is c/o Dentons GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Markgrafenstraße 33, 10117 Berlin, Germany. Securities Authorized for Issuance Under Equity Compensation Plans Following the restructuring of the Companies as a result of the former Self-Administration Proceedings and the corporate measures implemented in connection therewith, there is uncertainty over the future of the remuneration based on shares (share-based payment) programs, which may result in share options not being formally granted or, in some cases, cancellation of unexercised options, which may be done without compensation. Further, the Reverse Share Split with the exchange ratio of 1:75 may have a significant impact on options or awards granted. Long-Term Incentive Plan (LTIP) In November 2021, in conjunction with the consummation of our IPO, we established a new long-term incentive plan (the “LTIP”) with the purpose of advancing the interests of our shareholders and other stakeholders by enhancing our ability to attract, retain and motivate individuals who are expected to make important contributions to us. The LTIP governed issuances of equity and equity-based incentive awards from and after the consummation of our IPO. The maximum number of ordinary shares underlying awards granted pursuant to the LTIP (other than replacement awards under the LTIP) was not to exceed 10% of the Company’s issued share capital from time to time. The Company does not currently grant awards under LTIP or CSOP (as defined below) and currently does not intend to grant awards under the LTIP or CSOP in the future. The LTIP was, as applicable, administered by (i) the management board, to the extent the administration or operation of the LTIP related to the grant of awards to a participant who was not a management board member or supervisory board member, as well as any other matter relating to such awards, (ii) the Company’s supervisory board, to the extent the administration or operation of the LTIP related to the grant of awards to participants who were members of the compensation committee established by the supervisory board, as well as any other matter related to such awards, or (iii) the compensation committee established by the supervisory board for all other matters related to the administration or operation of the LTIP (each of these bodies, where appropriate, the “Committee”). Awards under the LTIP could be granted to our employees, the members of our management board and supervisory board, consultants or other advisors. 84 Awards under the LTIP could be granted in the form of stock options, stock appreciation rights, shares of restricted stock, restricted stock units, other share-based awards or a combination of the foregoing. The Committee had the ability to condition the right of an individual to exercise his or her awards upon the achievement or satisfaction of performance criteria. In the event of a good leaver’s (as defined in the LTIP) termination of employment or service, all vested awards must be exercised or settled in accordance with their terms within a period specified by the Committee and all unvested awards shall be canceled automatically without compensation unless otherwise determined by the Committee or set forth in the applicable award documentation. In the event of a bad leaver’s (as defined in the LTIP) termination of employment or service, all vested and unvested awards will be canceled automatically without compensation. In the event of a change in control (as defined in the LTIP) of the Company outstanding awards that are substituted or exchanged for equivalent replacement awards will be canceled. If outstanding rewards are not substituted or exchanged for equivalent replacement awards, the awards shall immediately vest and settle in full, unless otherwise decided by the Committee. Conversion Stock Option Program (CSOP) In December 2020, against the background of our intention to terminate all relevant benefits under former employee participation programs from 2017 and 2018 (respectively, the “VESP 2017” and “VESP 2018”) pursuant to which employees were granted virtual shares, we adopted our conversion stock option program (“CSOP”) under the LTIP in order to grant a total of 1,805,100 of stock options, each with an exercise price of €0.06, to the former beneficiaries under the VESP 2017 (except for one such beneficiary) and the VESP 2018, as well as one additional beneficiary, based on individual grant agreements. Under the CSOP, the Company granted 1,401,240 fully vested stock options, each with an exercise price of €0.06 and which are not subject to any performance criteria, with effect as of the closing date of our IPO on November 19, 2021 to all former beneficiaries under the VESP 2017 (except for one beneficiary who had not accepted our offer to transfer to the CSOP), as well as the one aforementioned additional beneficiary (the “VESP 2017 Tranche”). The VESP 2017 Tranche stock options became exercisable one year after the closing of our IPO and are exercisable only in certain windows. The VESP 2017 Tranche stock options will expire four years after the closing of our IPO. In addition, the Company granted 403,860 stock options (as of June 2023 all these stock options were fully vested), each with an exercise price of €0.06 and which are not subject to any performance criteria, with effect as of the closing date of our IPO on November 19, 2021 to the former beneficiaries under the VESP 2018 (the “VESP 2018 Tranche”). The VESP 2018 Tranche stock options are generally subject to a three-year vesting period with 1/36 of the stock options granted to the relevant beneficiary incrementally vesting for each month of employment of such beneficiary depending on the relevant vesting start date as set out in the relevant individual grant agreement. The then-vested VESP 2018 Tranche stock options became exercisable one year after the closing of our IPO and are exercisable only in certain windows. The VESP 2018 Tranche stock options will expire four years after the closing of our IPO. Immediately prior to the pricing of our IPO on November 16, 2021, we issued additional Ordinary Shares to all of our existing shareholders, replicating the effect of a share split. Each of our existing shareholders received 0.71 additional Ordinary Shares per Ordinary Share or High Voting Share held by them immediately prior to the pricing of our IPO, rounded down to the nearest integer. Our stock options reflect the effect of this issuance of shares, as the underlying securities for one stock option changed from one Ordinary Share to 1.71 Ordinary Shares, with issuable shares being rounded down to the nearest full integer. Restricted Stock Units Certain former supervisory board members received one-time awards of restricted stock units for Ordinary Shares (“RSUs”) under the LTIP in connection with the Company’s IPO and such individual’s appointment as a member of the supervisory board, starting from the date of the Company’s IPO. The awards were granted on November 21, 2021 and vest in four equal, annual installments on each anniversary of the grant date, with the fourth installment vesting on the earlier of (a) the fourth anniversary of the grant date or (b) the Company's annual general meeting of shareholders to be held in 2025. The number of RSUs, presented in the table below, represent the amount vested up to the respective resignation date. 85 Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in the First Column) Equity compensation plans approved by security holders – – – Equity compensation plans not approved by security holders: LTIP CSOP 33,423 € 4.50 – * RSUs (former supervisory board members) 266 € 0.00 – * Total 33,689 € 4.46 – * The LTIP, which previously covered the CSOP and RSUs awarded to former supervisory board members, was discontinued following the Company’s corporate restructuring in early 2024. As of December 31, 2024, no additional options, RSUs or other equity awards may be granted under the LTIP unless the Company’s management board resolves to reinstate the plan or a new equity compensation plan is adopted and, if required, approved by security holders. Item 13. Certain Relationships and Related Transactions, and Director Independence. The following is a summary of transactions since January 1, 2023, to which we have been a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our supervisory board members, management board members, executive officers or holders of more than five percent of any class of our voting securities, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements which are described in “ Executive Compensation ” in Item 11 of Part III of this Annual Report. Relationships with Executive Officers, Members of the Management Board and the Supervisory Board We entered into service agreements with our former and current executive officers and supervisory board members as discussed in more detail under “ Item 11. Executive Compensation — Service Agreements ” above. 86 Relationships with Other Related Parties Employee Participation Programs Some of our former key management personnel participated in our former employee participation program. For details on this program, see “ Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters — Securities Authorized for Issuance Under Equity Compensation Plans ”. Agreements with Yorkville In the context of the former Self-Administration Proceedings and in connection with the First Commitment, the Companies entered into the Yorkville Investment Agreements with Yorkville in mid-November 2023, and on April 30, 2024, the Company and Yorkville entered into an amendment to the Funding Commitment Letter in connection with the Second Commitment. Pursuant to the Yorkville Investment Agreements, Yorkville committed to provide financing to the Company, subject to the Companies’ continued compliance with the terms of the Yorkville Investment Agreements. For more information, see “ Item 1. Business — Financing Arrangements with Yorkville — The Yorkville Restructuring Investment “. Under the terms of the Funding Commitment Letter, funding from Yorkville in connection with the Yorkville Investment is to be provided by way of new interest-bearing convertible debenture(s). The convertible debenture with respect to the first tranche of the Yorkville Restructuring Investment was issued to Yorkville on February 6, 2024 for approximately $4.3 million and the convertible debenture with respect to the Second Tranche was issued to Yorkville on August 30, 2024 for approximately $3.3 million. In connection with the Funding Commitment Letter, SVSE and Yorkville entered into both a pledge agreement (the “Pledge Agreement”) and a security agreement (the “Security Agreement”), each dated February 5, 2024, pursuant to which SVSE agreed to pledge and grant to Yorkville, as a third-party pledge, a security interest in certain financial assets, including, among others, all of the Ordinary Shares and High Voting Shares that SVSE currently holds or at any time acquires (collectively, the “Pledged Ownership Interests”). The Pledged Ownership Interests serve as collateral for the repayment of the Company’s obligations to Yorkville. In the event that the Company is in default of its payment obligations to Yorkville, following notification thereof to SVSE, the voting rights and dividend rights in the Pledged Ownership Interests would accrue to Yorkville. In certain instances, Yorkville may also have the right to enforce its right of pledge and sell the Pledged Ownership Interests, thereby using the proceeds from the sale to repay the amounts owed by the Company to Yorkville. On June 20, 2024, in connection with the Yorkville Restructuring Investment, the Subsidiary and SVSE entered into a guaranty agreement (the “Guaranty”) for the benefit of Yorkville. Under the terms of the Guaranty, each of the Subsidiary and SVSE have agreed, among other things (i) to jointly and severally guarantee the payment of obligations owed by the Company to Yorkville in full when due and (ii) to guarantee the performance of all of the terms, covenants and conditions required to be kept, observed or performed by the Company in the Guaranty, the Funding Commitment Letter, the new convertible debentures, the Security Agreement and the Pledge Agreement. The Guaranty is irrevocable, absolute and unconditional and applies to all obligations owed by the Company to Yorkville whenever arising. Under the terms of the Guaranty, certain events of default would enable Yorkville, at its option and in its discretion, to accelerate some or all of the obligations so that they become immediately due and payable. On December 30, 2024, the Company and Yorkville entered into the Securities Purchase Agreement, pursuant to which the Company agreed to sell and issue to Yorkville the New Commitment Debenture in the aggregate principal amount of $5 million. The issuance and sale of the New Commitment Debenture is subject to certain conditions and limitations, including the Company’s receipt of notice from Nasdaq that the Company has met all the applicable requirements for listing of the Ordinary Shares on the Nasdaq Capital Market. The New Commitment Debenture, when issued, will mature on the one-year anniversary of the issuance date of the New Commitment Debenture. Further, interest will accrue on the outstanding principal balance of the New Commitment Debenture at an annual rate of 12%, which will increase to an annual rate of 18% upon an Event of Default (as defined in the New Commitment Debenture) for so long as such Event of Default remains uncured. Yorkville will have the right to convert the New Commitment Debenture into Ordinary Shares at the lower of (i) the Fixed Conversion Price or (ii) the Variable Conversion Price; provided that the Variable Conversion Price may not be lower than the Floor Price (as defined in the New Commitment Debenture) then in effect and the nominal value of one Ordinary Share. 87 On December 30, 2024, the Company and Yorkville also entered into the Exchange Agreement, pursuant to which the Company agreed, subject to the satisfactions of certain conditions precedent, to issue 1,242 Preferred Shares, each with a nominal value of €300, to Yorkville solely in exchange for the surrender and cancellation of all of the debentures held by Yorkville, including the 2022 Convertible Debentures, the 2024 Debentures, the New Commitment Debenture (if issued) and the Advance Debentures. The closing of the transactions contemplated by the Exchange Agreement are subject to certain conditions precedent, including the Company’s receipt of notice from Nasdaq that the Company has met all the applicable requirements for listing of the Ordinary Shares on the Nasdaq Capital Market. On February 12, 2025, the Company and Yorkville entered into the First Omnibus Amendment, pursuant to which the parties agreed to modify the terms of the Securities Purchase Agreement to, among other things, (i) provide for an immediate advance of $1,000,000 of the Yorkville Commitment in the form of the First Advance Debenture and (ii) extend the termination date with respect to the obligations of Yorkville under the Securities Purchase Agreement from January 15, 2025 to February 28, 2025. In addition, the parties agreed in the First Omnibus Amendment that any and all obligations of Yorkville to provide additional funding to the Company, including in connection with the Yorkville Restructuring Investment, shall be considered to be satisfied by the commitments made pursuant to the Securities Purchase Agreement and the First Omnibus Amendment. On March 7, 2025, the Company and Yorkville entered into the Second Omnibus Amendment pursuant to which the parties agreed to modify the terms of the Exchange Agreement to (i) amend the floor price provided for in the Exchange Agreement and (ii) to extend the termination date with respect to the obligations of Yorkville under the Exchange Agreement from January 15, 2025 to April 15, 2025. In addition, the parties agreed in the Second Omnibus Amendment to extend the termination date with respect to the obligations of Yorkville under the Securities Purchase Agreement from February 28, 2025 to April 15, 2025. On March 25, 2025, the Company and Yorkville entered into the into the Third Omnibus Amendment, pursuant to which the parties agreed to modify the terms of the Securities Purchase Agreement to, among other things, provide for an immediate advance of $1 million of the Yorkville Commitment in the form of the Second Advance Debenture. The issuance of the Second Advance Debenture further reduced the principal amount of the New Commitment Debenture to be issued to $3 million. Under the terms of the Third Omnibus Amendment, the New Commitment Debenture and the Advance Debentures fall within the scope of the Exchange Agreement and therefore within the scope of the Debt Conversion, subject to the satisfaction of the conditions precedent thereto, including, among others, the Company’s receipt of notice from Nasdaq that the Company has met all the applicable requirements for listing of the Ordinary Shares on the Nasdaq Capital Market. The First Advance Debenture and the Second Advance Debenture will mature on February 12, 2026 and March 24, 2026, respectively. Further, interest accrues on the outstanding principal balance of the Advance Debentures at an annual rate of 12%, which will increase to an annual rate of 18% upon an Event of Default (as defined in the Advance Debentures) for so long as such Event of Default remains uncured. Yorkville will have the right to convert the Advance Debentures into Ordinary Shares of the Company at the lower of (i) the Fixed Conversion Price or (ii) the Variable Conversion Price; provided that the Variable Conversion Price may not be lower than the Floor Price (as defined in the Advance Debentures) then in effect and the nominal value of one Ordinary Share. In connection with the transactions contemplated by the Securities Purchase Agreement, Yorkville and SVSE, whose sole member is George O’Leary, the Company’s Chief Executive Officer and sole member of the management board, intend to enter into a call option agreement (the “Call Option Agreement”) before the issuance of the New Commitment Debenture, which is contingent on Nasdaq’s approval to list the Ordinary Shares on the Nasdaq Capital Market. Pursuant to the Call Option Agreement, SVSE will agree to provide Yorkville with a call option (the “Call Option”) to purchase all of the Ordinary Shares and High Voting Shares held by SVSE at a price of $0.1125 per Ordinary Share and $1.875 per High Voting Share. The Call Option will expire at 5:00 p.m. Eastern time on the four-year anniversary of the date of the Call Option Agreement (the “Expiration Time”), and may be exercised prior to the Expiration Time on multiple occasions with respect to a portion of the Ordinary Shares and High Voting Shares held by SVSE. Under the terms of the Call Option Agreement, Yorkville may not exercise the Call Option if, after giving effect to such exercise, Yorkville and any of its affiliates would beneficially own more than 4.99% of (i) the number of High Voting Shares outstanding, (ii) the number of Ordinary Shares outstanding, or (iii) the voting power of the total capital of the Company (including due to the voting rights of the High Voting Shares). Such ownership limitations may be waived by Yorkville upon not less than 65 days prior notice to the Company. 88 Item 14. Principal Accountant Fees and Services. The following table presents fees for professional services rendered by Grassi & Co., CPAs, P.C. (“Grassi”), our principal independent registered public accounting firm, for the years ended December 31, 2024 and December 31, 2023: 2024 2023 ($ in millions) Audit Fees (1) $ 0.5 $ 0.8 Audit Related Fees (2) – – Tax Fees (3) – – All Other Fees (4) – – Total 0.5 0.8 (1) “Audit Fees” include fees associated with the annual audit, consultations on various accounting issues, performance of local statutory audits and comfort letters and review of offering documents filed with the SEC. (2) “Audit Related Fees” include fees for professional services rendered by the principal accountant and not included under the prior category. These services include, among others, fees relating to the issuance of limited assurance and other review reports in connection with our offering of securities. (3) “Tax Fees” include fees for professional services rendered by the principal accountant for tax compliance, advice and planning. (4) “All Other Fees” include fees for products and services provided by the principal accountant, other than Audit Fees and Audit-Related Fees. Pre-Approval Policies and Procedures The audit committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm. These policies generally provide that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by the audit committee or the engagement is entered into pursuant to the pre-approval procedure described below. From time to time, the audit committee may pre-approve specified types of services that are expected to be provided to us by our independent registered public accounting firm during the next 12 months. Any such pre-approval is detailed as to the particular service or type of services to be provided and is also generally subject to a maximum dollar amount. The audit committee approved all of the services described above and determined that the provision of such services is compatible with maintaining the independence of Grassi. 89 PART IV Item 15. Exhibits and Financial Statement Schedules. (a) Documents filed as part of this report (a)(1) Financial Statements The Financial Statements required to be filed by Item 8 of this Annual Report, and filed in this Item 15, are as follows: Audited financial statements Page Report of Independent Registered Public Accounting Firm (PCAOB ID: 606) F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Operations and Comprehensive Income (Loss) F-3 Consolidated Statement of Changes in Shareholders' Equity F-4 Consolidated Statement of Cash Flows F-5 Notes to Consolidated Financial Statements F-6 (a)(2) Financial Statement Schedules Schedules are omitted because they are not applicable, or are not required, or because the information is included in the financial statements and notes thereto. (a)(3) Exhibits The following is a list of exhibits filed or furnished, as the case may be, as part of this Annual Report. Exhibit No. Description of Document 3.1 Articles of Association of Sono Group N.V. (translated into English) (incorporated herein by reference to Exhibit 3.1 of the Company’s Report of Foreign Private Issuer on Form 6-K filed with the SEC on December 30, 2024) 3.2 Proposed amendment of the Company’s articles of association with Part A (English translation) (incorporated herein by reference to Exhibit 99.3 to the Company’s Report of Foreign Private Issuer on Form 6-K filed with the SEC on October 23, 2024) 90 3.3 Proposed amendment of the Company’s articles of association with Part B (English translation) (incorporated herein by reference to Exhibit 99.4 of the Company’s Report of Foreign Private Issuer on Form 6-K filed with the SEC on October 23, 2024) 3.4 Proposed amendment of the Company’s articles of association with Part C (increased authorized capital) (English translation) (incorporated herein by reference to Exhibit 99.5 to the Company’s Report of Foreign Private Issuer on Form 6-K filed with the SEC on October 23, 2024) 3.5 Form of internal rules of the Management Board of Sono Group N.V. (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to the Company’s Registration Statement on Form F-1 (File No. 333-260432) filed with the SEC on November 8, 2021) 3.6 Form of internal rules of the Supervisory Board of Sono Group N.V. (incorporated by reference to Exhibit 3.3 to Amendment No. 1 to the Company’s Registration Statement on Form F-1 (File No. 333-260432) filed with the SEC on November 8, 2021) 4.1* Description of the rights of each class of securities registered under Section 12 of the Securities Exchange Act of 1934 10.1 Form of Registration Rights Agreement (incorporated by reference to Exhibit 4.1 to Amendment No. 1 to the Company’s Registration Statement on Form F-1 (File No. 333-260432) filed with the SEC on November 8, 2021) 10.2 Form of Long-Term Incentive Plan of Sono Group N.V. (incorporated herein by reference to Exhibit 10.1 of the Company's Registration Statement on Form F-1 (File No. 333-260432) filed with the SEC October 22, 2021) 10.3 Conversion Stock Option Program 2020 (incorporated herein by reference to Exhibit 10.2 of the Company’s Registration Statement on Form F-1 (File No. 333-260432) filed with the SEC on October 22, 2021) 10.4 Form of Indemnification Agreement between Sono Group N.V. and members of the management board (incorporated herein by reference to Exhibit 10.3 of the Company’s Registration Statement on Form F-1 (File No. 333-260432) filed with the SEC on October 22, 2021) 10.5 Form of Indemnification Agreement between Sono Group N.V. and members of the supervisory board (incorporated herein by reference to Exhibit 10.4 of the Company’s Registration Statement on Form F-1 (File No. 333-260432) filed with the SEC on October 22, 2021) 10.6 Registration Rights Agreement by and between Sono Group N.V. and YA II PN, Ltd., dated December 7, 2022 (incorporated herein by reference to Exhibit 4.1 of the Company’s Registration Statement on Form F-3 (File No. 333-268709 filed with the SEC on December 8, 2022) 10.7 Securities Purchase Agreement by and between Sono Group N.V. and YA II PN, Ltd., dated December 7, 2022 (incorporated herein by reference to Exhibit 10.1 of the Company’s Registration Statement on Form F-3 (File No. 333-268709) filed with the SEC on December 8,2022) 10.8 Form of Convertible Debenture issued to YA II PN, Ltd. (incorporated herein by reference to Exhibit 10.2 of the Company’s Registration Statement on Form F-3 (File No. 333-268709) filed with the SEC on December 8, 2022) 10.9† Restructuring Agreement between Sono Group N.V. and YA II PN, Ltd, dated 17 November 2023 and effective as of November 20, 2023 (incorporated herein by reference to Exhibit 4.8 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022) 91 10.10 Amendment No. 1, dated February 2, 2024, to the Restructuring Agreement by and between Sono Group N.V. and YA II PN, Ltd. (incorporated herein by reference to Exhibit 4.9 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2023) 10.11 Amendment No. 2, dated February 5, 2024, to the Restructuring Agreement by and between Sono Group N.V. and YA II PN, Ltd. (incorporated herein by reference to Exhibit 4.10 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2023) 10.12† Continuation Agreement between Sono Group N.V. and Sono Motors GmbH, dated November 20, 2023 (incorporated herein by reference to Exhibit 4.9 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022) 10.13† Funding Commitment Letter issued by YA II PN, Ltd. and agreed to and acknowledged by Sono Group N.V., dated November 17, 2023 and effective as of November 20, 2023 (incorporated herein by reference to Exhibit 4.10 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022) 10.14 Amendment No. 1, dated February 2, 2024, to the Funding Commitment Letter dated November 17, 2023 issued by YA II PN, Ltd. to Sono Group N.V. (incorporated herein by reference to Exhibit 4.13 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2023) 10.15† Amendment No. 2, dated April 30, 2024, to the Funding Commitment Letter dated November 17, 2023 issued by YA II PN, Ltd. to Sono Group N.V. (incorporated herein by reference to Exhibit 4.14 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2023) 10.16 Shareholders Commitment Letter issued by Laurin Hahn and Jona Christians and agreed to and acknowledged by Sono Group N.V. and Sono Motors GmbH, dated November 17, 2023 and effective as of November 20, 2023 (incorporated herein by reference to Exhibit 4.11 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022) 10.17 Settlement Agreement between Sono Group N.V. and Sono Motors GmbH (incorporated herein by reference to Exhibit 4.12 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022) 10.18 Back-to-Back Letter of Comfort between Sono Group N.V. and Sono Motors GmbH (incorporated herein by reference to Exhibit 4.13 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022) 10.19† Amendment No. 1, dated May 8, 2024, to the Back-to-Back Letter of Comfort between Sono Group N.V. and Sono Motors GmbH (incorporated herein by reference to Exhibit 4.18 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2023) 10.20 Prolongation Agreement between YA II PN, Ltd. and Sono Group N.V., dated November 17, 2023 and effective as of November 20, 2023 (incorporated herein by reference to Exhibit 4.14 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022) 10.21 Form of Convertible Debenture issued to YA II PN, Ltd.(incorporated herein by reference to Schedule 3 to Exhibit 4.10 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022) 10.22 Sale and Transfer Agreement, dated February 1, 2024, by and among Laurin Hahn, Bambino 255. V V UG, SVSE LLC and Sono Group N.V. (1) (incorporated herein by reference to Exhibit 99.1 to Amendment No. 1 to Schedule 13D filed by Laurin Hahn with the SEC on March 25, 2024) 92 10.23 Sale and Transfer Agreement, dated February 1, 2024, by and among Jona Christians, Bambino 255. V V UG, SVSE LLC and Sono Group N.V.(1) (incorporated herein by reference to Exhibit 99.1 to Amendment No. 1 to Schedule 13D filed by Jona Christians with the SEC on March 25, 2024) 10.24 Guaranty Agreement, dated June 20, 2024, between SVSE LLC and Sono Motors GmbH, with and for the benefit of YA II PN, Ltd. (incorporated herein by reference to Exhibit 4.23 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2023) 10.25 Securities Purchase Agreement, dated December 30, 2024, by and between Sono Group N.V. and YA II PN, Ltd. (incorporated herein by reference to Exhibit 10.1 of the Company’s Report of Foreign Private Issuer on Form 6-K filed with the SEC on December 30, 2024) 10.26 Form of Secured Convertible Debenture (incorporated herein by reference to Exhibit 4.1 of the Company’s Report of Foreign Private Issuer on Form 6-K filed with the SEC on December 30, 2024) 10.27 Exchange Agreement, dated December 30, 2024, by and between Sono Group N.V. and YA II PN, Ltd. (incorporated herein by reference to Exhibit 10.2 of the Company’s Report of Foreign Private Issuer on Form 6-K filed with the SEC on December 30, 2024) 10.28 Form of Call Option Agreement, by and between SVSE LLC and YA II PN, Ltd. (incorporated herein by reference to Exhibit 4.2 of the Company’s Report of Foreign Private Issuer on Form 6-K filed with the SEC on December 30, 2024) 10.29 Omnibus Amendment to Transaction Documents, dated February 12, 2025, by and between Sono Group N.V. and YA II PN, Ltd. (incorporated herein by reference to Exhibit 10.2 of the Company’s Report on Form 8-K filed with the SEC on February 13, 2025) 10.30 Omnibus Amendment to Transaction Documents, dated March 7, 2025, by and between Sono Group N.V. and YA II PN, Ltd. (incorporated herein by reference to Exhibit 10.1 of the Company’s Report on Form 8-K filed with the SEC on March 7, 2025) 10.31 Omnibus Amendment to Transaction Documents, dated March 25, 2025, by and between Sono Group N.V. and YA II PN, Ltd. (incorporated herein by reference to Exhibit 10.2 of the Company’s Report on Form 8-K filed with the SEC on March 26, 2025) 10.32 Secured Convertible Debenture, dated February 12, 2025, issued by Sono Group N.V. to YA II PN, Ltd. (incorporated herein by reference to Exhibit 10.1 of the Company’s Report on Form 8-K filed with the SEC on February 13, 2025) 10.33 Secured Convertible Debenture, dated March 25, 2025, issued by Sono Group N.V. to YA II PN, Ltd. (incorporated herein by reference to Exhibit 10.1 of the Company’s Report on Form 8-K filed with the SEC on March 26, 2025) 19.1* Insider Trading Policy of Sono Group N.V. 21.1 List of Significant Subsidiaries (incorporated herein by reference to Exhibit 21.1 of the Company’s Registration Statement on Form F-1 (File No. 333-260432) filed on October 22, 2021) 23.1* Consent of Grassi & Co., CPAs, P.C. 31.1* Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 93 31.2* Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1** Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2** Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 97 Clawback Policy (incorporated herein by reference to Exhibit 97 of the Company’s Annual Report on Form 20-F for the year ended December 31, 2022) 101.INS* Inline XBRL Instance Document 101.SCH* Inline XBRL Schema Documents 101.CAL* Inline XBRL Calculation Linkbase Document 101.LAB* Inline XBRL Label Linkbase Document 101.PRE* Inline XBRL Presentation Linkbase Document 101.DEF* Inline XBRL Definition Linkbase Document 104* Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) * Filed herewith. ** Furnished herewith † Schedules and exhibits to this agreement have been omitted pursuant to Item 601(a)(5) of Regulation S-K. (1) This exhibit contains a typographical error with respect to “Bambino 225. V V UG”. The correct legal name is “Bambino 255. V V UG”. Item 16. Form 10-K Summary. None. 94 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized . SONO GROUP N.V. Date: April 16, 2025 By: /s/ George O’Leary George O’Leary Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Signature Title Date /s/ George O’Leary Chief Executive Officer (Principal Executive Officer) and Member of the Management Board April 16, 2025 George O’Leary /s/ M. Scott Calhoun Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) April 16, 2025 M. Scott Calhoun /s/ David Dodge Chairperson of the Supervisory Board April 16, 2025 David Dodge /s/ Christopher Schreiber Member of the Supervisory Board April 16, 2025 Christopher Schreiber /s/ Owen May Member of the Supervisory Board April 16, 2025 Owen May 95 Sono Group N.V. Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID: 606 ) F-1 Consolidated Balance Sheets F-2 Consolidated Statements of Operations and Comprehensive Income (Loss) F-3 Consolidated Statement of Changes in Shareholders' Equity F-4 Consolidated Statement of Cash Flows F-5 Notes to Consolidated Financial Statements F-6 Report of Independent Registered Public Accounting Firm To the Audit Committee, Supervisory Board and Shareholders of Sono Group N.V. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Sono Group N.V. (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders’ equity, and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt about the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company (i) has incurred losses and negative cash flows from operations since inception, (ii) has an accumulated deficit and negative equity, (iii) is dependent on its ability to comply with the terms of certain investment related agreements to access the unfunded amounts provided for therein or obtain alternative financing, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Explanatory Paragraph—Change in Accounting Framework The Company adopted U.S. generally accepted accounting principles (U.S. GAAP) in place of International Financial Reporting Standards (IFRS) as its basis of accounting, effective January 1, 2025. The comparative financial information presented for current and prior periods has been retrospectively adjusted to conform to U.S. GAAP as detailed in Note 2 to the consolidated financial statements. Our opinion is not modified with respect to this matter. Explanatory Paragraph—Correction of an Error with a Prior Year Impact As discussed in Note 2 to the consolidated financial statements, the 2023 consolidated financial statements has been restated to correct a misstatement in Research and Development expenses. The misstatement related to expenses recorded in the incorrect period. The correction of the misstatement resulted in an adjustment of Research and Development expenses in the year ended December 31, 2023 of $352k EUR. Our opinion is not modified with respect to this matter. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company’s auditor since 2024. Jericho, New York April 16, 2025 F-1 SONO GROUP NV CONSOLIDATED BALANCE SHEETS December 31, 2024 2023 KEUR KEUR ASSETS Current Assets Cash 1,354 7,412 Inventory 304 – Prepaid taxes 531 681 Prepaid expenses and other 103 778 Total Current Assets 2,292 8,871 Property, plant and equipment, net of accumulated depreciation of KEUR 51 and KEUR- 0 - as of December 31, 2024 and 2023, respectively 129 – Right of use lease assets 630 679 Total Assets 3,051 9,550 LIABILITIES AND SHAREHOLDERS ’ EQUITY Current Liabilities Accounts payable and accrued expenses 575 56,576 Lease liability, current portion 58 49 Convertible notes payable at fair value 24,035 25,629 VAT payable 487 14,350 Other current liabilities 5 4 Total Current Liabilities 25,160 96,608 Long-Term Liabilities Lease liability, long term portion 572 630 Total Liabilities 25,732 97,238 Commitments and Contingencies (see Note 14) Shareholders ’ Equity Ordinary Shares, par value € 0.02 per share, 4,300,000 shares authorized, 1,409,885 and 1,408,895 shares issued and outstanding as of December 31, 2024 and 2023, respectively (1) 28 85 High Voting Shares, par value € 0.5 per share, 53,400 shares authorized, 40,000 shares issued and outstanding as of December 31, 2024 and 2023, respectively (1) 20 60 Additional paid-in capital 298,699 298,621 Accumulated deficit ( 321,428 ) ( 386,454 ) Total Shareholders’ Equity ( 22,681 ) ( 87,688 ) Total Liabilities and Shareholders’ Equity 3,051 9,550 (1) In December 2024, the Company effected a 1-for-75 reverse share split for Ordinary Shares and High Voting Shares. All share and per-share data have been retroactively adjusted throughout this report to account for this share split. In connection with the reverse share split, the Company also decreased the nominal value per share from €0.06 to €0.02 for Ordinary Shares and from €1.50 to €0.5 for High Voting Shares. The amounts presented for the year ended December 31, 2023 reflect the prior nominal values of €0.06 and €1.50. See the accompanying notes to these Consolidated Financial Statements F-2 SONO GROUP NV CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Year Ended December 31, 2024 2023 KEUR KEUR Revenue – 42 Cost of sales – 70 Gross margin – ( 28 ) Operating Expenses and Costs Selling and distribution expenses 678 1,110 General and administrative expenses 4,648 13,213 Research and development 1,118 16,136 (Gain)/Loss on deconsolidation/reconsolidation ( 62,554 ) 21,778 Other Operating income ( 398 ) ( 976 ) Total Operating Expenses and Costs ( 56,508 ) 51,261 Income (Loss) from Operations 56,508 ( 51,289 ) Other Income (Expenses) Income/(Loss) from changes in fair value of convertible note payable carried at fair value 8,923 5,404 Interest income – 13 Interest expense – ( 55 ) (Loss)/Gain on foreign currency translation ( 405 ) 220 Total Other Income (Expenses) 8,518 5,582 Net Income (Loss) 65,026 ( 45,707 ) Net income (loss) per share to common shareholders: Basic € 44.86 € ( 31.99 ) Diluted € 3.77 € ( 31.99 ) Weighted average number of common shares: Basic 1,449,485 1,428,858 Diluted 17,254,895 1,428,858 See the accompanying notes to these Consolidated Financial Statements F-3 SONO GROUP NV CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS ’ EQUITY YEAR ENDED DECEMBER 31, 2024 AND 2023 Ordinary Shares Outstanding Ordinary Shares High Voting Shares Outstanding High Voting Shares Additional Paid in Capital Accumulated Deficit Total Shareholder’s Equity (#) KEUR (#) KEUR KEUR KEUR KEUR Balance at December 31, 2022 1,212,614 5,457 40,000 4,500 277,308 ( 340,747 ) ( 53,482 ) Retroactive reclassification of par value in connection with December 2024 reverse share split – ( 6,255 ) – ( 4,440 ) 10,695 – – Convertible debentures conversion 195,011 877 – – 11,190 – 12,067 Exercise of share options 1,270 6 – – – – 6 Share-based compensation – – ( 572 ) – ( 572 ) Loss for the period – – – ( 45,707 ) ( 45,707 ) Balance at December 31, 2023 1,408,895 85 40,000 60 298,621 ( 386,454 ) ( 87,688 ) Retroactive reclassification of par value in connection with December 2024 change in nominal share price ( 61 ) ( 40 ) 101 – – Issuance of Ordinary Shares in connection with December 2024 reverse share split 9 - – – – – Exercise of share options 981 4 – – – 4 Cancellation of options on termination – – ( 23 ) – ( 23 ) Income for the period – – – 65,026 65,026 Balance at December 31, 2024 1,409,885 28 40,000 20 298,699 ( 321,428 ) ( 22,681 ) See the accompanying notes to these Consolidated Financial Statements F-4 SONO GROUP NV CONSOLIDATED STATEMENT OF CASH FLOWS Year ended December 31, 2024 KEUR December 31, 2023 KEUR Cash Flows from Operating Activities Net income (loss) 65,026 ( 45,707 ) Adjustments to reconcile net income to net cash used in operating activities Depreciation of property, plant and equipment 18 29 Impairment of property, plant and equipment – 3,842 Stock based compensation ( 19 ) ( 572 ) Gain on deconsolidation / reconsolidation ( 62,554 ) ( 40,122 ) Income / (loss) from changes in fair value of convertible note payable carried at fair value ( 8,923 ) ( 5,404 ) Other non-cash (income) / expense – 6,280 Movements in provisions – 51,347 Interest paid – ( 49 ) Changes in operating assets and liabilities: Inventory ( 304 ) – Prepaid taxes 150 – Prepaid expenses and other 675 4,805 Right of use lease assets 49 78 Accounts payable and accrued expenses 5,106 16,656 Advance payments received from customers – ( 2,605 ) Lease Liability ( 49 ) – VAT payable ( 13,862 ) – Net cash used in operating activities ( 14,687 ) ( 11,422 ) Cash Flows from Investing Activities Acquisition of property and equipment ( 80 ) ( 3,842 ) Reconsolidation (deconsolidation) of the Subsidiary cash balance 1,305 ( 7,481 ) Net cash provided by (used in) investing activities 1,225 ( 11,323 ) Cash Flows from Financing Activities Proceeds from the issuance of convertible notes 7,000 – Proceeds from issue of shares on stock option scheme – 6 Net cash provided by financing activities 7,000 6 Net increase / (decrease) in cash ( 6,462 ) ( 22,739 ) Effect of currency translation on cash and cash equivalents 404 ( 206 ) Cash at December 31, 2023 7,412 30,357 Cash at December 31, 2024 1,354 7,412 Supplemental disclosure of cash flow information: Cash paid during the period for interest – 49 Cash paid during the period for income tax – – See the accompanying notes to these Consolidated Financial Statements F-5 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 1 - BUSINESS AND BUSINESS PRESENTATION Business Sono Group N.V. (“Sono N.V.” or the “Company”) is registered in the business register (Netherlands Chamber of Commerce) and its corporate seat is in Amsterdam. In November 2021, the Company successfully completed an initial public offering (IPO) and became listed on The Nasdaq Global Market (“Nasdaq Global Market”). The Company’s ordinary shares commenced trading on the Nasdaq Global Market under the ticker symbol “SEV” on November 17, 2021. On July 12, 2023 and August 28, 2023, the Company received notices from Nasdaq Global Market stating that the staff of the Listing Qualifications Department (the “Staff”) had determined that the Company’s securities will be delisted from Nasdaq in accordance with Nasdaq’s Listing Rules and notifying the Company of the suspension in trading of its ordinary shares as of the opening of business on July 21, 2023. On December 11, 2023, the Company received a decision of the Nasdaq Hearings Panel (the “Panel”) advising the Company that the Panel has determined to delist the Company’s ordinary shares from Nasdaq. On February 15, 2024, Nasdaq filed a Form 25 Notification of Delisting with the U.S. Securities and Exchange Commission (the “SEC”) to complete the delisting. On July 2, 2024, the quoting of the Company’s ordinary shares commenced on OTCQB under the ticker symbol “SEVCF”. The Company has its management in the United States of America since January 31, 2024. Prior to this date, the Company’s management was based in Germany. The business address of the Company is Waldmeisterstraße 93, 80935 Munich, Germany (trade register number: 80683568 ). Sono N.V.’s sole and wholly-owned subsidiary, Sono Motors GmbH (“Sono Motors” or the “Subsidiary”), is registered in the commercial register ( Handelsregister ) at the local court ( Amtsgericht ) of Munich, Germany, under HRB 224131. Sono Motors’ registered headquarters is Waldmeisterstraße 93, 80935 Munich, Germany. Sono N.V. is the ultimate parent of the Group. Hereinafter, Sono N.V. and its consolidated subsidiary collectively are referred to as “Sono Group”, or the “Group”, “Management”, “we” and “us”. Sono Group intended to develop and manufacture electric vehicles with integrated solar panels (the “Sion passenger car program”). In addition, it planned to license its solar technology to other Original Equipment Manufacturers (“OEMs”). However, on February 24, 2023, Sono Group announced the decision to terminate the Sion passenger car program and to pivot the business model to exclusively retrofitting and integrating Sono Group’s solar technology onto third party vehicles due to lack of available funding. As a consequence, management decided to apply for the opening of the self-administration proceedings with respect to Sono N.V. and Sono Motors (the “Self-Administration Proceedings”) on May 15, 2023. The Subsidiary withdrew its application for Preliminary Self-Administration Proceedings (as defined herein) on January 31, 2024, and the Subsidiary exited its Self-Administration Proceedings on February 29, 2024. See “Note 3 Liquidity and Going concern” for additional information. These consolidated financial statements reflect all adjustments including normal recurring adjustments, which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the periods presented in accordance with the accounting principles generally accepted in the United States of America (“GAAP”). On a consolidated basis, the Company’s operations are comprised of the parent company, Sono N.V. and its subsidiary, Sono Motors. All significant intercompany transactions and balances have been eliminated upon consolidation. In addition, certain amounts in the prior periods consolidated financial statements have been reclassified to conform to the current period presentation. F- 6 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES A summary of the significant accounting policies applied in the presentation of the accompanying consolidated financial statements follows: Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for annual financial reporting. All amounts referred to in the notes to the consolidated financial statements are presented in euros (EUR) and have been rounded to the nearest thousand, unless otherwise stated. Substantially all of the Company’s operations are conducted in EUR and the current reporting currency is the same as the functional currency. At the end of the second quarter of 2024, the Company determined that it no longer qualified as a foreign private issuer under the SEC rules. As a result, beginning January 1, 2025, the Company became subject to the reporting requirements applicable to U.S. domestic issuers. Accordingly, these consolidated financial statements have been prepared in accordance with U.S. GAAP, and the transition from International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), has been applied retrospectively to all periods presented. Use of Estimates The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ from those estimates. Significant estimates include assumptions about cash flow and fair value assumptions associated with measurements of convertible notes payable carried at fair value, valuation of inventory; the valuation and recognition of stock-based compensation expense; valuation allowance for deferred tax assets; and borrowing rate consideration for right-of-use (“ROU”) lease assets including related lease liability and useful life of fixed assets. F- 7 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash For financial statement purposes, the Company considers all cash in the bank to be cash. Leases Upon transition under ASU 2016 - 02, the Company elected the suite of practical expedients as a package applied to all of its leases, including (i) not reassessing whether any expired or existing contracts are or contain leases, (ii) not reassessing the lease classification for any expired or existing leases, and (iii) not reassessing initial direct costs for any existing leases. For new leases, the Company will determine if an arrangement is or contains a lease at inception. Leases are included as ROU assets within other assets and ROU liabilities within accrued expenses and other liabilities and within other long-term liabilities on the Company’s consolidated balance sheets. Additionally, the Company elected the exemption available under ASC 842 - 20 - 25 - 2 for short term lease agreements and recognizes lease payments on a straight line basis. ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The Company’s leases do not provide an implicit rate. The Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term. See Note 8 for more complete details on balances as of the reporting periods presented herein. Inventory Inventory consisting of stock used in development, is stated at the lower of cost or net realizable value. Cost is determined by the first -in, first -out method. Stock counts are taken routinely and obsolete, outdated inventory is directly charged off to cost of goods sold. F- 8 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Concentrations of Credit Risk The Company’s financial instruments that are exposed to a concentration of credit risk are cash and accounts receivable. Generally, the Company’s cash and cash equivalents are in checking accounts. Property and Equipment Property and equipment are stated at cost. When retired or otherwise disposed, the related carrying value and accumulated depreciation are removed from the respective accounts and the net difference less any amount realized from disposition, is reflected in earnings. For consolidated financial statement purposes, property and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives of 5 to 7 years. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Fair Value of Assets and Liabilities Fair value is the price that would be received from the sale of an asset or paid to transfer a liability (i.e., an exit price) in the principal or most advantageous market in an orderly transaction between market participants. In determining fair value, the accounting standards have established a three -level hierarchy that distinguishes between (i) market data obtained or developed from independent sources (i.e., observable data inputs) and (ii) a reporting entity’s own data and assumptions that market participants would use in pricing an asset or liability (i.e., unobservable data inputs). Financial assets and financial liabilities measured and reported at fair value are classified in one of the following categories, in order of priority of observability and objectivity of pricing inputs: ● Level 1 – Fair value based on quoted prices in active markets for identical assets or liabilities; ● Level 2 – Fair value based on significant directly observable data (other than Level 1 quoted prices) or significant indirectly observable data through corroboration with observable market data. Inputs would normally be (i) quoted prices in active markets for similar assets or liabilities, (ii) quoted prices in inactive markets for identical or similar assets or liabilities or (iii) information derived from or corroborated by observable market data; ● Level 3 – Fair value based on prices or valuation techniques that require significant unobservable data inputs. Inputs would normally be a reporting entity’s own data and judgments about assumptions that market participants would use in pricing the asset or liability. The fair value measurement level for an asset or liability is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques should maximize the use of observable inputs and minimize the use of unobservable inputs. F- 9 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) The Company utilizes a binomial lattice option pricing model to estimate the fair value of options, warrants, beneficial conversion features and other Level 3 financial assets and liabilities. The Company believes that the binomial lattice model results in the best estimate of fair value because it embodies all of the requisite assumptions (including the underlying price, exercise price, term, volatility, and risk-free interest-rate) necessary to fairly value these instruments and, unlike less sophisticated models like the Black-Scholes model, it also accommodates assumptions regarding investor exercise behavior and other market conditions that market participants would likely consider in negotiating the transfer of such an instruments. Stock-Based Compensation The Company accounts for stock-based compensation to employees and nonemployees under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718 “Compensation – Stock Compensation” using the fair value-based method. Under this method, compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. This guidance establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. The Company uses a binomial lattice pricing model to estimate the fair value of options and warrants granted. Income Taxes The Company follows Accounting Standards Codification subtopic 740 - 10, Income Taxes (“ASC 740 - 10” ) for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability during each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse and are considered immaterial. No income tax has been provisioned for the years ended December 31, 2024 and 2023, since the Company has sustained losses historically and has substantial net operating loss carryforwards for both periods. Due to the uncertainty of the utilization and recoverability of the loss carry-forwards and other deferred tax assets, management has determined a full valuation allowance for the deferred tax assets, since it is more likely than not that the deferred tax assets will not be realizable. Recurring Fair Value Measurements The carrying value of the Company’s financial assets and financial liabilities is their cost, which may differ from fair value. The carrying value of cash held as demand deposits, accounts payable, and accrued liabilities approximated their fair value. F- 10 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net Income / (Loss) per Share Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period. During the year ended December 31, 2023 the Company reported a net loss and excluded all outstanding stock options and other dilutive securities from the calculation of diluted net loss per common share because inclusion of these securities would have been anti-dilutive. As of December 31, 2024 the Company reported net income and accordingly, included outstanding stock options and the shares indexed to the Convertible Notes Payable at Fair Value of 33,689 and 15,771,230 respectively. Business Segments The Company uses the “management approach” to identify its reportable segments. The management approach designates the internal organization used by management for making operating decisions and assessing performance as the basis for identifying the Company’s reportable segments. Using the management approach, the Company determined that it has one operating segment, solar retrofitting of vehicles. Correction of an Error in Research and Development Expenses During the preparation of the financial statements for the year ended December 31, 2024, the Company identified an error resulting from the misclassification of certain costs associated with research and development activities. Specifically, amounts incurred for services provided in fiscal year 2023 were erroneously recorded within fiscal year 2024. The error has been corrected retrospectively by reclassifying the affected amounts to the proper fiscal year. As a result, 2023 Research and Development expenses which had been reported at $ 15,783 was restated to $ 16,136 and Accounts payable and accrued expenses which had been reported at $ 55,798 was restated to $ 56,576 . The accumulated deficit was restated as a result of the foregoing changes from $ 385,677 to $ 386,454 . Recently Issued Pronouncements In March 2024, the FASB issued ASU No. 2024 - 01, “Compensation—Stock Compensation (Topic 718 ): Scope Applications of Profits Interests and Similar Awards” (“ASU 2024 - 01” ). ASU 2024 - 01 adds an example to Topic 718 which illustrates how to apply the scope guidance to determine whether profits interests and similar awards should be accounted for as share-based payment arrangements under Topic 718 or under other U.S. GAAP. ASU 2024 - 01 is effective for annual periods beginning after December 15, 2025, although early adoption is permitted. Upon adoption, ASU 2024 - 01 is not expected to have an impact on the Company’s consolidated financial statements. In March 2024, the FASB issued ASU No 2024 - 02, “Codification Improvements - Amendments to Remove References to the Concepts Statements” (“ASU 2024 - 02” ). ASU 2024 - 02 removes references to various Concepts Statements. In most instances, the references are extraneous and not required to understand or apply the guidance. ASU 2024 - 02 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. ASU 2024 - 02 can be applied prospectively or retrospectively. Upon adoption, ASU 2024 - 01 is not expected to have an impact on the Company’s consolidated financial statements. In November 2024, the FASB issued ASU No. 2024 - 03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ).” This standard requires disclosure of specific information about costs and expenses and becomes effective January 1, 2027. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. In November 2024, the FASB issued ASU 2024 - 04, “Debt - Debt with Conversions and Other Options (Subtopic 470 - 20 ): Induced Conversions of Convertible Debt Instruments” (“ASU 2024 - 04” ). ASU 2024 - 04 clarifies the requirements for determining whether certain settlements of convertible debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently convertible, should be accounted for as an induced conversion. The requirements of ASU 2024 - 04 are effective for the Company for fiscal years beginning after December 15, 2025, and interim periods within those periods. We are currently evaluating the impact of this standard on our consolidated financial statements and related disclosures. Recently Adopted Pronouncements In November 2023, the FASB issued Accounting Standards Update 2023 - 07, Segment Reporting (Topic 280 ): Improvements to Reportable Segment Disclosures (“ASU 2023 - 07” ), which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023 - 07, as well as all existing segment disclosures and reconciliation requirements in ASC 280, on an interim and annual basis. ASU 2023 - 07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted this standard in the year ended December 31, 2024. The adoption did not have a material effect on the Company’s consolidated financial statements. In December 2023, the FASB issued Accounting Standards Update 2023 - 09, Income Taxes (Topic 740 ): Improvements to Income Tax Disclosures (“ASU 2023 - 09” ), which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023 - 09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted this standard in the year ended December 31, 2024. The adoption did not have a material effect on the Company’s consolidated financial statements. No other new accounting pronouncements were issued or became effective in the period that had, or are expected to have, a material impact on our consolidated Financial Statements. F- 11 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 3 – LIQUIDITY AND GOING CONCERN ANALYSIS Liquidity and Going Concern During the second quarter of 2014, the FASB issued ASU No. 2014 - 15, Presentation of Financial Statements - Going Concern (Subtopic 205 - 40 ): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. This update provided U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. Under this standard, the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period, including interim periods. In evaluating the Company’s ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within 12 months after the Company’s financial statements were issued ( April 1, 2026). Management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and the Company’s obligations due before April 1, 2026. The Company is subject to a number of risks, including uncertainty related to product development and generation of revenues and positive cash flow from its Sono Motors GmbH division and a dependence on outside sources of capital. The attainment of profitable operations is dependent on future events, including obtaining adequate financing to fulfill the Company’s growth and operating activities and generating a level of revenues adequate to support the Company’s cost structure. As of December 31, 2024, the Company had cash balances of EUR1.4 million, a working capital deficit of EUR22.9 million and an accumulated deficit of EUR( 321.4 ) million. For the year ended December 31, 2024, the Company had net income of EUR65.0 million, which includes a gain from deconsolidation/reconsolidation. The Company used cash from operating activities of EUR( 14.7 ) million. The Company expects to continue to incur small net losses and have net cash outflows for at least the next 12 months, offset by cash flows from financing activities. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, if the additional funding commitment from YA II PN, Ltd (“Yorkville”) is achieved based upon the notification from Nasdaq of our uplisting to the Nasdaq Capital Market, which cannot be guaranteed, the Company will have sufficient funds to meet its obligations within one year from the date of the consolidated financial statements. Based upon this uncertainty, Management has concluded that there is substantial doubt that the company will continue as a going concern. F- 12 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 4 – DECONSOLIDATION DUE TO LOSS OF CONTROL Gain from Deconsolidation and Extinguishment of Debt At the close of February 2023, Sono Group announced the decision to restructure the business model to focus exclusively on retrofitting and integrating solar technology into third -party vehicles going forward. At the same time, Sono Group discontinued the Sion passenger car program with immediate effect and terminated approximately 250 employees. Management ultimately concluded that Sono Motors was over-indebted and faced impending illiquidity ( drohende Zahlungsunfähigkeit ), with Sono N.V., in turn, becoming over-indebted and also facing impending illiquidity. Consequently, management decided to apply for the opening of self-administration proceedings with respect to Sono N.V. and Sono Motors with the goal of sustainably restructuring the business. On May 15, 2023, Sono N.V. applied to the insolvency court of Munich, Germany (the “Court”), to permit the opening of a self-administration proceeding ( Eigenverwaltung ) with respect to Sono Group N.V. pursuant to Section 270 (b) of the German Insolvency Code ( Insolvenzordnung ). On the same day, Sono Motors GmbH applied to the same court to permit the opening of self-administration proceeding in the form of a protective shield proceeding ( Schutzschirmverfahren ) with respect to Sono Motors GmbH pursuant Section 270 (d) of the German Insolvency Code. Sono Group N.V. conducts its business through its subsidiary Sono Motors GmbH, and is jointly referred to as “the Company”. Self-administration proceedings are debtor-in-possession type proceedings under German insolvency law, which are available to businesses in financial distress and typically aim to preserve the business and the entity that are the subject of the proceedings. In these proceedings, Management retains control and operation of the subject company’s business under the supervision of a custodian, who is initially appointed on a preliminary basis ( vorläufiger Sachwalter ) and is primarily responsible for monitoring the subject company’s compliance with German insolvency law. On May 17 and May 19, 2023, respectively, the Court admitted the opening of Self-Administration Proceedings with respect to the Company and the Subsidiary on a preliminary basis (the “Preliminary Self-Administration Proceedings”). The Court also appointed preliminary custodians for each of the Company and the Subsidiary in their respective Preliminary Self-Administration Proceedings. On September 1, 2023, the Court opened the Self-Administration Proceedings with respect to the Subsidiary (the “Opened GmbH Self-Administration Proceedings”). As a result, considering all facts and conditions, management concluded that Sono N.V. lost control over Sono Motors upon opening of insolvency proceedings in self-administration (protective shield proceedings, May 19, 2023). Sono N.V. therefore deconsolidated Sono Motors as of May 19, 2023 in accordance with ASU 810 - 10 - 55. Upon loss of control, Sono N.V. derecognized the assets and liabilities of Sono Motors from the consolidated statement of financial position, recognized its remaining investment retained in Sono Motors at its fair value and subsequently accounted for the investment under the equity method of accounting pursuant to ASU 810 - 10 - 55. In connection with the deconsolidation, the Company recognized no fair value of the subsidiary at the date of deconsolidation, derecognized the carrying value of assets and liabilities transferred, and recorded a gain for the excess of liabilities extinguished over the carrying value of assets derecognized. Additionally, the Company recognized a provision for potential creditor claims during the Self-Administration Proceedings. The provision was charged against the deconsolidation gain. The net deconsolidation gain and reversal of the parental guarantee provision was EUR62.6 million. F- 13 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 Reconsolidation of Sono Motors GmbH On March 1, 2024, the Company was deemed to have regained control of Sono Motors. The Company recorded the fair value of net assets consolidated at March 1, 2024. The following table reflects the March 1, 2024 Balance Sheet of Sono Motors: March 1, 2024 KEUR Cash 1,305 Prepaid taxes 239 Prepaid expenses and other current assets 559 Fixed assets 66 Accounts payable and other liabilities ( 191 ) Net assets recorded on reconsolidation 1,978 F- 14 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 5 – PREPAID EXPENSES AND OTHER Prepaid and other expenses as of December 31, 2024 and 2023 were KEUR103 and KEUR778, respectively. NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT Property, plant and equipment as of December 31, 2024 and 2023 were as follows: 2024 KEUR 2023 KEUR Machinery & equipment 180 – Accumulated depreciation ( 51 ) – 129 – Depreciation expense during the years ended December 31, 2024 and 2023 was $ 18 and $ 29 , respectively. NOTE 7 – LEASES The Company leases its office and warehouse space. The lease has a remaining life of 5yrs. The Company accounts for its leases according to ASC 842 Leases. Lease expense was $ 169 and $ 209 in the years ended December 31, 2024 and 2023, respectively. Maturities of operating lease liabilities were as follows as of December 31, 2024: KEUR 2025 167 2026 167 2027 167 2028 167 2029 and beyond 392 Total Lease payments 1,060 Less interest 430 Present value of lease payments 630 Balance Sheet Classification Liability KEUR Asset KEUR Current 58 Long term 572 630 Total Lease 630 630 The lease was calculated over a 122 month period at a weighted average discount rate of 18 %. NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Amounts related to accounts payable and accrued expenses as of December 31, 2024 and 2023 were as follows: 2024 KEUR 2023 KEUR Trade accounts payable 575 1,049 Insolvency related payables – 1,668 Accrued payroll liabilities – – Parental guarantee provision – 53,860 Total accounts payable and accrued liabilities 575 56,576 F- 15 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 9 – CONVERTIBLE NOTES PAYABLE AT FAIR VALUE As of December 31, 2024 and 2023, the estimated fair value of our convertible debt is as follows: 2024 KEUR 2023 KEUR Face value $ 27,656 convertible notes due December 7, 2023 (in default) 24,035 25,629 On December 7, 2022, the Company entered into a share purchase agreement with Yorkville to purchase up to $ 31.1 million in convertible debentures (the “ 2022 Debentures”). On February 5, 2024 and August 30, 2024, Company issued additional convertible debentures in the amounts of $ 4.3 million and $ 3.3 million, respectively, (the “February 2024 Debenture” and "August 2024 Debenture” respectively, and together, the “2024 Debentures”), pursuant to a funding commitment letter entered into between the Company and Yorkville in connection with Sono Group’s restructuring in connection with the Self-Administration Proceedings. The following table reflects the outstanding debt and accrued interest for each tranche as of December 31, 2024 and December 31, 2023: December 31, 2024 Issue Date Principal KUSD Accrued Interest KUSD Tranch-1 @ 4 % ( 12 % - default rate) December 7, 2022 11,100 2,370 Tranch-2 @ 4 % ( 12 % - default rate) December 8, 2022 8,150 1,657 Tranch-3 @ 4 % ( 12 % - default rate) December 20, 2022 750 153 Tranch-4 @ 12 % ( 18 % - default rate) February 5, 2024 4,318 470 Tranch-5 @ 12 % ( 18 % - default rate) August 30, 2024 3,338 136 Total 27,656 4,785 December 31, 2023 Issue Date Principal KUSD Accrued Interest KUSD Tranch-1 @ 4 % ( 12 % - default rate) December 7, 2022 11,100 1,034 Tranch-2 @ 4 % ( 12 % - default rate) December 8, 2022 8,150 676 Tranch-3 @ 4 % ( 12 % - default rate) December 20, 2022 750 62 Total 20,000 1,772 F- 16 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 The 2022 Debentures carry a coupon of 4 % and were convertible into common stock at the holder’s option at, the lower of (i) $ 1.75 , or (ii) 96.5 % of the lowest daily VWAP of the Ordinary Shares during the ( 7 ) consecutive Trading Days immediately preceding the conversion date or other date of determination). As a result of the amendment described below, the 2022 Debentures have a maturity date of the later of July 1, 2025 or 12 months from the issuance date of each such new note. The 2022 Debentures contain default provisions that accelerate the payment of principal and interest calculated at the default rate of 12 %. Resulting from the Company’s application for its Self-Administration Proceedings, the 2022 Debentures have been in default since May 15, 2025. In November 2023, the contractual terms of the 2022 Debentures were renegotiated and significantly amended resulting in modified convertible debentures. The maturity date was extended until July 1, 2025. The conversion price was changed to the lower of USD 0.25 and 85 % of the minimum daily volume-weighted average price on the seven trading days before conversion, provided that the conversion price will not be below the nominal value of EUR 0.06 , as translated to USD, and, if and only if the shares of Sono Group are listed and traded on Nasdaq on the relevant conversion date, the conversion price will not be lower than the Floor Price of USD 0.006 . The 2024 Debentures carry a coupon of 12 % and are convertible into common stock at the holder’s option at, the lower of ( x ) a price per Ordinary Share equal to $ 18.75 or (y) 85 % of the lowest daily volume weighted average price of the Ordinary Shares during the seven consecutive trading days immediately preceding the date of conversion (the “2024 Variable Conversion Price”); provided, that the 2024 Variable Conversion Price may not be lower than (i) a price equal to 20 % of the closing price of the ordinary shares on the trading day immediately prior to the issuance date of the debenture and (ii) the nominal value of one ordinary share. The 2024 Debentures contain default provisions that accelerate the payment of principal and interest calculated at the default rate of 18 %. The February 2024 Debenture has a maturity date of July 1, 2025, and the August 2024 Debenture has a maturity date of August 30, 2025. The Company has evaluated the terms and conditions of the convertible notes under the guidance of ASC 815. The conversion feature did not meet the definition of “indexed to a company’s own stock” provided for in ASC 815 due to the variable number of shares issuable at conversion. Therefore, the conversion feature requires bifurcation and liability classification. Rather than bifurcating and recording the embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815 - 15 - 25 - 4. The carrying value of the convertible notes, which under ASC 815 - 15 - 25 - 4 is Fair Value, is on the balance sheet, with changes in the carrying value being recorded in earnings. The components of the convertible promissory notes as of December 31, 2024 and 2023 are as follows: 2024 2023 Indexed common shares 18,537,485 12,441,365 Fair value per share $ 1.24 $ 1.86 Total Fair Value of Convertible Notes EUR24,035 EUR25,629 The Company utilized a binomial lattice option pricing model to estimate the fair value per share of the underlying common equity. The Company believes that the binomial lattice model results in the best estimate of fair value because it embodies all of the requisite assumptions (including the underlying price, exercise price, term, volatility, and risk-free interest-rate) necessary to fairly value these instruments and, unlike less sophisticated models like the Black-Scholes model, it also accommodates assumptions regarding investor exercise behavior and other market conditions that market participants would likely consider in negotiating the transfer of such an instruments. The table below reflects the assumptions used as inputs to the binomial lattice option pricing model. Assumption December 31, 2024 December 31, 2023 Closing price of underlying common equity $ 4.18 $ 5.92 Exercise price $ 1.75 $ 1.64 Volatility of underlying common equity 150 % 150 % Remaining term (in years) 1 1 Risk Free treasury rates 4.18 % 4.20 % Foreign exchange rate at year end USD/EUR 1.0389 1.105 F- 17 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 10 – SHAREHOLDERS ’ EQUITY As of December 31, 2024, the Company had authorized share capital of 4,300,000 ordinary shares with a nominal value of €0.02 per share and 53,400 high voting shares with a nominal value of €0.50 per share. As of December 31, 2024, 1,409,885 ordinary shares and 40,000 high voting shares were issued and outstanding. On December 23, 2024, the Company amended its articles of association to implement a reverse share split (the “Reverse Share Split”) of both its ordinary shares and high voting shares at a ratio of 1 -for- 75 . The Reverse Share Split had been previously approved by the Company’s shareholders at an extraordinary general meeting held on January 31, 2024 ( the “January 2024 EGM”). The Reverse Share Split took market effect on January 6, 2025, following confirmation from the Financial Industry Regulatory Authority (“FINRA”) that it had received and reviewed all necessary documentation to process the Reverse Share Split. In connection with the Reverse Share Split, every 75 ordinary shares issued and outstanding immediately prior to the Reverse Share Split were converted into one ordinary share, and every 75 high voting shares were converted into one high voting share. Fractional shares resulting from the Reverse Share Split were rounded down to the nearest whole number, with no cash or other compensation paid in lieu of fractional shares. All share and per-share data have been retroactively adjusted throughout this report to account for this share split. In connection with the reverse share split, the Company also decreased the nominal value per share from €0.06 to €0.02 for Ordinary Shares and from €1.50 to €0.5 for High Voting Shares. The amounts presented for the year ended December 31, 2023 reflect the prior nominal values of €0.06 and €1.50. As a result of these actions, the presentation of the Company’s ordinary shares and high voting shares in the consolidated financial statements as of December 31, 2024 and 2023 has been adjusted to reflect the post-split basis for comparative purposes. Stock Options In December 2020, against the background of our intention to terminate all relevant benefits under former employee participation programs from 2017 and 2018 (respectively, “VESP 2017” and “VESP 2018” ) pursuant to which employees were granted virtual shares, we adopted our conversion stock option program under the LTIP (“CSOP”). Under the CSOP, the Company granted 1,850,100 fully vested stock options, each with an exercise price of €0.06 and which are not subject to any performance criteria, with effect as of the closing date of our IPO on November 19, 2021. The stock options became exercisable one year after the closing of our IPO and are exercisable only in certain windows. The stock options will expire four years after the closing of our IPO. Certain former supervisory board members received one -time awards of restricted stock units for Ordinary Shares (“RSUs”) under the LTIP in connection with the Company’s IPO and such individual’s appointment as a member of the supervisory board, starting from the date of the Company’s IPO. The awards of a total of 63,868 RSUs were granted on November 21, 2021 and vest in four equal, annual installments on each anniversary of the grant date, with the fourth installment vesting on the earlier of (a) the fourth anniversary of the grant date or (b) the Company's annual general meeting of shareholders to be held in 2025. As of December 31, 2022 there were 15,967 RSUs fully vested. As of December 31, 2023 there were 19,724 RSUs fully vested. Due to termination of the former supervisory board members no further RSUs were vested in the year 2024. F- 18 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 For purposes of the table below, all outstanding stock options and exercise prices have been retrospectively adjusted to reflect the Reverse Share Split implemented on December 23, 2024. The following table summarizes stock option activity as of and for the years ended December 31, 2024 and 2023: Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price EUR Weighted Average Remaining Contractual Term (Yrs) Average Intrinsic Value EUR Outstanding at January 1, 2023 37,924 4.23 3.2 – Granted during the period – Exercised during the period 1,023 Forfeited during the period 1,535 Outstanding December 31, 2023 35,119 4.41 2.0 – Granted during the period – Exercised during the period 981 Forfeited during the period – Outstanding at December 31, 2024 33,689 4.46 0.9 – Exercisable at December 31, 2024 33,689 4.46 0.9 – NOTE 11 – GENERAL AND ADMINISTRATIVE EXPENSES The table below provides details on general and administrative expenses: December 31, 2024 KEUR December 31, 2023 KEUR Professional fees 2,546 6,241 Personnel costs 1,517 3,427 Building lease expense 169 209 Insurance 140 2,713 Software fees and subscriptions 96 397 Other expenses 180 226 Total general and administrative expenses 4,648 13,213 NOTE 12 – RESEARCH AND DEVELOPMENT EXPENSES December 31, 2024 KEUR December 31, 2023 KEUR Development costs 237 1,990 Professional fees 184 2,700 Personnel expenses 654 8,231 Software fees and subscriptions 22 517 Impairment – 2,642 Other expenses 21 56 Total research and development expenses 1,118 16,136 NOTE 13 – SELLING AND DISTRIBUTION EXPENSES December 31, 2024 KEUR December 31, 2023 KEUR Personnel expenses 565 693 Advertising and marketing 112 403 Other expenses 1 14 Total selling and distribution expenses 678 1,110 F- 19 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 14 – COMMITMENTS AND CONTINGENCIES Service contracts The Company carries various service contracts on its office buildings and certain copier equipment for repairs, maintenance and inspections. All contracts are short term and can be cancelled on notice. Litigation None. NOTE 15 – INCOME TAXES Current tax assets and liabilities Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities based on the tax rates and tax laws that are enacted or substantively enacted at the end of the reporting period. Deferred taxes Deferred tax is recognized using the liability method on temporary differences as of the end of the reporting period between the carrying amounts of assets and liabilities and their tax bases. Deferred tax liabilities are recognized for all taxable temporary differences. The only exception is if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination which, at the time of the transaction, affects neither accounting profit or loss nor taxable profit or loss. Deferred tax liabilities are recognized for all taxable temporary differences associated with investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary differences, and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets are recognized for deductible temporary differences and to the extent that it is probable that future taxable income will allow the deferred tax asset to be realized. Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized, or the liability is settled based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period. Deferred tax assets may only be recognized up to the amount of the deferred tax liabilities as it is not sufficiently probable that future taxable profit will be available against which they can be utilized. If transactions and other events are recognized directly in equity, any related taxes on income are also recognized directly in equity. As transaction costs are recognized in the capital reserve, corresponding (deferred) tax effects are recognized partly due to the loss situation of Sono Group and the fact that deferred taxes for losses carried forward were partly recognized at the level of Sono N.V. Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset current tax assets and current tax liabilities and these relate to income taxes levied by the same tax jurisdiction. F- 20 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 Rate Reconciliation 2024 2023 Pre-tax book Income (Loss) 63,973 ( 56,028 ) Expected tax/(benefit) at 32.98% international statutory rates ( 21,098 ) ( 18,478 ) Current Year Change in Valuation Allowance 21,098 18,478 Income tax expense – – Deferred Tax Assets/(Liab.) Detail 2024 2023 NOL DTA 106,429 103,436 (Gain) From Change in FV of Convertible Debt ( 242 ) ( 242 ) Unrecognized tax losses 1,274 1,274 Permanent differences – – Tax deductible transaction cost – 114 CSOP non tax deductible expenses – 179 RSU supervisory board – ( 34 ) ESOP non tax deductible expenses – ( 108 ) Non tax deductible expenses – 8 Net Deferred Tax Asset 107,461 104,627 Less valuation allowance ( 107,461 ) ( 104,627 ) Deferred Tax Assets – – The table above presents the gross deferred taxes only for reasons of understanding and completeness, as no deferred taxes have been recognized due to a (deferred tax asset/liabilities) net position of zero. As the net deferred tax asset was not booked in a first step, no valuation allowance is booked. Given the loss history of the Company, deferred tax assets are not recognized on the balance sheet. The amount of deferred tax assets/liabilities as of December 31, 2024 and 2023 are zero. There are no deferred taxes with regard to Outside Basis Differences as those are permanent differences. NOTE 16 – FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amounts of certain financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximate their respective fair values due to the short-term nature of such instruments. The Company measures certain financial instruments at fair value on a recurring basis, including certain convertible notes payable, derivative financial instruments arising from conversion features embedded in convertible notes for which the conversion rate was not fixed, and equity-class. All financial instruments carried at fair value fall within Level 3 of the fair value hierarchy as their value is based on unobservable inputs. The Company evaluates its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. This determination requires significant judgments to be made. The following table summarizes the conclusions reached regarding fair value measurements as of December 31, 2024 and 2023: As of December 31, 2024 KEUR Level 1 Level 2 Level 3 Total Liabilities: Convertible notes payable at fair value 24,035 24,035 Total Liabilities 24,035 24,035 As of December 31, 2023 KEUR Level 1 Level 2 Level 3 Total Liabilities: Convertible notes payable at fair value 25,629 25,629 Total Liabilities 25,629 25,629 Convertible notes payable is a Level 3 financial instrument that is measured at fair value on a recurring basis. Gains/(Losses) from the change in fair value of convertible notes payable were KEUR8,923 and KEUR5,404, respectively. Convertible Notes Payable at Fair Value KEUR Balance December 31, 2022 32,011 Changes resulting from foreign exchange rates and other ( 978 ) Fair value measurement (gain)/loss ( 5,404 ) Balance December 31, 2023 25,629 Proceeds from new borrowing 7,000 Changes resulting from foreign exchange rates and other 329 Fair value measurement (gain)/loss ( 8,923 ) Balance December 31, 2024 24,035 F- 21 SONO GROUP NV NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2024 AND 2023 NOTE 17 – SUBSEQUENT EVENTS On December 23, 2024, the Company amended its articles of association to implement the Reverse Share Split. The Reverse Share Split was previously approved by the Company’s shareholders at the January 2024 EGM. The Reverse Share Split took market effect on January 6, 2025, following confirmation from the Financial Industry Regulatory Authority that it had received and reviewed all necessary documentation to process the Reverse Share Split. See “Note 10–Shareholders’ Equity”. On December 30, 2024, the Company and Yorkville entered into an exchange agreement (the “Exchange Agreement”), pursuant to which the Company agreed, subject to the satisfactions of certain conditions precedent, to issue 1,242 shares of preferred stock of the Company (the “Preferred Shares”), each with a nominal value of €300, to Yorkville solely in exchange for the surrender and cancellation of all of the debentures held by Yorkville, including the New Commitment Debenture (if issued) and the Advance Debentures (as defined herein) (the “Debt Conversion”). Under the terms of the Exchange Agreement, as amended on February 12, 2025, March 7, 2025 and March 25, 2025, the Company agreed to issue 1,242 Preferred Shares to Yorkville solely in exchange for the surrender and cancellation of all of the debentures held by Yorkville, including the New Commitment Debenture (if issued) and the Advance Debentures. In connection with the conversion of each Preferred Share, the effective conversion price (the “Effective Conversion Price”) per share will be equal to 85 % of the lowest daily volume weighted average price of the Company’s ordinary shares during the 10 trading days immediately preceding the date of the notice of conversion, subject to a floor price equal to (i) $ 4.00 , from the closing date until the end of the day that is six months from the date the ordinary shares are listed on the Nasdaq Capital Market, and (ii) $ 1.00 thereafter. On February 12, 2025, the Company and Yorkville entered into the into an Omnibus Amendment to Transaction Documents (the “First Omnibus Amendment”), pursuant to which the parties agreed to modify the terms of the Exchange Agreement and the terms of the securities purchase agreement entered into between the Company and Yorkville on December 30, 2024 ( the “Securities Purchase Agreement”). Under the terms of the Securities Purchase Agreement, Yorkville committed to provide limited financing to the Company in the amount of $ 5 million (the “Yorkville Commitment”) in the form of a new convertible debenture (the “New Commitment Debenture”), subject to certain conditions and limitations, including the Company’s receipt of notice from Nasdaq that the Company has met all the applicable requirements for listing of its ordinary shares on the Nasdaq Capital Market. The First Omnibus Agreement modified the terms of the Securities Purchase Agreement to, among other things, (i) provide for an immediate advance of $ 1,000,000 of the Yorkville Commitment in the form of a $ 1,000,000 secured convertible debenture (the “First Advance Debenture”), and (ii) extend the termination date with respect to the obligations of Yorkville under the Securities Purchase Agreement from January 15, 2025 to February 28, 2025. In addition, the parties agreed in the First Omnibus Amendment that any and all obligations of Yorkville to provide additional funding to the Company, including any obligations arising under the including in connection with the funding commitment letter entered into between the Company and Yorkville that became effective on November 20, 2023, shall be considered to be satisfied by the commitments made pursuant to the Securities Purchase Agreement and the First Omnibus Amendment. In addition, under the terms of the First Omnibus Amendment, the Company and Yorkville amended the Exchange Agreement to include the First Advance Debenture and the remaining New Commitment Debenture within the scope of the Exchange Agreement and therefore within the scope of the Debt Conversion, subject to the satisfaction of the conditions precedent thereto. On March 7, 2025, the Company and Yorkville entered into a second Omnibus Amendment to Transaction Documents (the “Second Omnibus Amendment”) pursuant to which the parties agreed to modify the terms of the Exchange Agreement to (i) amend the floor price provided for in the Exchange Agreement and (ii) to extend the termination date with respect to the obligations of Yorkville under the Exchange Agreement from January 15, 2025 to April 15, 2025. In addition, the parties agreed in the Second Omnibus Amendment to extend the termination date with respect to the obligations of Yorkville under the Securities Purchase Agreement from February 28, 2025 to April 15, 2025. On March 25, 2025, the Company and Yorkville entered into the into a third Omnibus Amendment to Transaction Documents (the “Third Omnibus Amendment”), pursuant to which the parties agreed to modify the terms of the Securities Purchase Agreement to, among other things, provide for an immediate advance of $ 1,000,000 of the Yorkville Commitment in the form of a second $ 1,000,000 secured convertible debenture (the “Second Advance Debenture” and together with the First Advance Debenture, the “Advance Debentures”). As a result of the issuance of the Advance Debentures, and pursuant to the Second Omnibus Amendment, the New Commitment Debenture to be issued to Yorkville, upon the satisfaction of all of the conditions set forth in the Securities Purchase Agreement, will have an aggregate principal amount of $ 3,000,000 . Under the terms of the Third Omnibus Amendment, the Company and Yorkville also amended the Exchange Agreement to include each of the New Commitment Debenture and the Advance Debentures within the scope of the Exchange Agreement and therefore within the scope of the Debt Conversion, subject to the satisfaction of the conditions precedent thereto. The First Advance Debenture and the Second Advance Debenture will mature on February 12, 2026 and March 24, 2026, respectively. Further, interest accrues on the outstanding principal balance of the Advance Debentures at an annual rate of 12 %, which will increase to an annual rate of 18 % upon an Event of Default (as defined in the Advance Debentures) for so long as such Event of Default remains uncured. Yorkville will have the right to convert the Advance Debentures into ordinary shares of the Company at the lower of (i) a price per ordinary share equal to $ 18.75 or (ii) 85 % of the lowest daily volume weighted average price of the ordinary shares during the seven consecutive trading days immediately preceding the conversion date or other date of determination (the “Variable Conversion Price”); provided that the Variable Conversion Price may not be lower than the Floor Price (as defined in the Advance Debentures) then in effect and the nominal value of one Ordinary Share. F-22