Sono Group N.V. 10-Q

Item 1. Financial Statements SONO GROUP N.V. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share amounts) September 30, 2025 December 31, 2024 (unaudited) (audited) KEUR KEUR ASSETS Current Assets Cash 2,250 1,354 Inventory 312 304 Prepaid taxes 597 531 Prepaid expenses and other 102 103 Total Current Assets 3,261 2,292 Property, plant and equipment, net of accumulated depreciation 106 129 Right of use lease assets 588 630 Total Assets 3,955 3,051 LIABILITIES AND SHAREHOLDERS ’ EQUITY Current Liabilities Accounts payable and accrued expenses 595 575 Lease liability, current portion 167 58 Convertible notes payable at fair value - 24,035 VAT payable 236 487 Other current liabilities 27 5 Total Current Liabilities 1,025 25,160 Long-Term Liabilities Lease liability, long term portion 421 572 Total Liabilities 1,446 25,732 Commitments and Contingencies (see Note 13) Shareholders ’ Equity Preferred Shares, par value € 300.00 per share, 1,401 shares authorized, 1,401 and 0 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively (Note 9) 420 - Ordinary Shares, par value € 0.01 per share, 120,000,000 shares authorized, 1,424,186 and 1,409,885 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively (Note 9) 14 28 High Voting Shares, par value € 0.25 per share, 40,000 shares authorized, 40,000 shares issued and outstanding as of September 30, 2025 and December 31, 2024, respectively (Note 9) 10 20 Additional paid-in capital 316,859 298,699 Accumulated deficit ( 314,794 ) ( 321,428 ) Total Shareholders’ Equity 2,509 ( 22,681 ) Total Liabilities and Shareholders’ Equity 3,955 3,051 See accompanying Notes to the unaudited Condensed Consolidated Financial Statements. 1 SONO GROUP N.V. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share amounts) (unaudited) For the three months ended September 30, For the nine months ended September 30, 2025 2024 2025 2024 KEUR KEUR KEUR KEUR Revenue 49 - 101 - Cost of sales 18 - 57 - Gross margin 31 - 44 - Operating Expenses and Costs Selling and distribution expenses 186 205 662 448 General and administrative expenses 1,231 753 3,512 3,627 Research and development 435 519 1,402 1,076 Gain on reconsolidation - - - ( 63,491 ) Other Operating (income)/loss ( 250 ) 4 ( 381 ) ( 66 ) Total Operating Expenses and Costs 1,602 1,481 5,195 ( 58,406 ) (Loss)/Income from Operations ( 1,571 ) ( 1,481 ) ( 5,151 ) 58,406 Other Income (Expenses) (Loss) / income from changes in fair value of convertible note payable carried at fair value ( 35 ) ( 8,809 ) 11,108 13,100 Gain / (loss) on foreign currency transactions 215 783 675 ( 1,575 ) Total Other (Expense) / Income ( 180 ) ( 8,026 ) 11,783 11,525 Net (loss) / income ( 1,391 ) ( 9,507 ) 6,632 69,931 Net (loss) / income per share to common shareholders: Basic € ( 0.95 ) ( 6.56 ) 4.56 48.26 Diluted ( 0.95 ) ( 6.56 ) 0.72 3.58 Weighted average number of common shares: Basic 1,463,101 1,449,868 1,454,361 1,449,060 Diluted 1,463,101 1,449,868 9,206,350 19,542,240 See accompanying Notes to the unaudited Condensed Consolidated Financial Statements. 2 SONO GROUP N.V. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS ’ EQUITY (Amounts in thousands, except share amounts) (unaudited) Ordinary Shares Outstanding Ordinary Shares High Voting Shares Outstanding High Voting Shares Preferred Shared Outstanding Preferred Shares Additional Paid in Capital Accumulated Deficit Total Shareholder’s Deficit (#) KEUR (#) KEUR (#) KEUR KEUR KEUR KEUR Balance at December 31, 2023 1,408,895 85 40,000 60 - - 298,621 ( 386,454 ) ( 87,688 ) Income for the period - - - - 80,882 80,882 Balance at March 31, 2024 1,408,895 85 40,000 60 - - 298,621 ( 305,572 ) ( 6,806 ) Loss for the period - - - - ( 1,443 ) ( 1,443 ) Balance at June 30, 2024 1,408,895 85 40,000 60 - - 298,621 ( 307,015 ) ( 8,249 ) Loss for the period - - - ( 9,507 ) ( 9,507 ) Balance at September 30, 2024 1,408,895 85 40,000 60 - - 298,621 ( 316,522 ) ( 17,756 ) Ordinary Shares Outstanding Ordinary Shares High Voting Shares Outstanding High Voting Shares Preferred Shared Outstanding Preferred Shares Additional Paid in Capital Accumulated Deficit Total Shareholder’s Deficit (#) KEUR (#) KEUR (#) KEUR KEUR KEUR KEUR Balance at December 31, 2024 1,409,885 28 40,000 20 - - 298,699 ( 321,428 ) ( 22,681 ) Issuance of Ordinary Shares in connection with December 2024 reverse share split 36 - - - - - - - - Income for the period - - - 8,837 8,837 Balance at March 31, 2025 1,409,921 28 40,000 20 - - 298,699 ( 312,591 ) ( 13,844 ) Loss for the period - - - ( 812 ) ( 812 ) Balance at June 30, 2025 1,409,921 28 40,000 20 - - 298,699 ( 313,403 ) ( 14,656 ) Issuance of Ordinary Shares in connection with SPA in July 2024 14,265 - - - - - 85 - 85 Issuance of Preferred Shares in September 2025 - - - - 1,401 420 18,051 - 18,471 Reclassification of par value in connection with September 2025 change in nominal share price - ( 14 ) - ( 10 ) - - 24 - - Loss for the period ( 1,391 ) ( 1,391 ) Balance at September 30, 2025 1,424,186 14 40,000 10 1,401 420 316,859 ( 314,794 ) 2,509 See accompanying Notes to the unaudited Condensed Consolidated Financial Statements. 3 SONO GROUP N.V. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (unaudited) For the nine months ended September 30, 2025 KEUR September 30, 2024 KEUR Cash Flows from Operating Activities Net income 6,632 69,931 Adjustments to reconcile net income to net cash used in operating activities Depreciation of property, plant and equipment 31 27 Gain on reconsolidation - ( 63,491 ) Income from changes in fair value of convertible note payable carried at fair value ( 11,108 ) ( 13,100 ) Other non-cash (income)/expenses ( 686 ) ( 896 ) Changes in operating assets and liabilities: Inventory ( 8 ) ( 178 ) Prepaid taxes ( 66 ) 459 Prepaid expenses and other 1 1,085 Right of use lease assets 42 36 Accounts payable and accrued expenses 251 ( 7,604 ) Lease Liability ( 42 ) ( 36 ) VAT payable ( 251 ) - Other current liabilities 22 276 Net cash used in operating activities ( 5,182 ) ( 13,491 ) Cash Flows from Investing Activities Acquisition of equipment ( 8 ) ( 6 ) Reconsolidation of the Subsidiary cash balance - 1,305 Net cash (used in)/provided by investing activities ( 8 ) 1,299 Cash Flows from Financing Activities Proceeds from the issuance of convertible notes 5,990 7,000 Proceeds from the issuance of common stock 85 - Net cash provided by financing activities 6,075 7,000 Effect of currency translation on cash 11 - Net increase (decrease) in cash 896 ( 5,192 ) Cash at December 31, 2024 and 2023 1,354 7,412 Cash at September 30, 2025 and 2024 2,250 2,220 Supplemental disclosure of cash flow information: Cash paid during the period for interest - - Cash paid during the period for income tax - - See accompanying Notes to the unaudited Condensed Consolidated Financial Statements. 4 1. Organization and Description of 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”. On September 4, 2025, the Company received approval to list its ordinary shares on the Nasdaq Capital Market, and the ordinary shares commenced trading on Nasdaq under the ticker symbol “SSM” on September 5, 2025. 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 condensed 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 (“US GAAP”). 5 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. 2. Basis of Presentation, Consolidation and Summary of 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 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. The unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present a fair statement of the Company’s condensed consolidated financial position as of September 30, 2025 and the results of operations for the nine month period then ended. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary in order to make the condensed consolidated financial statements not misleading have been included. All significant intercompany accounts and transactions have been eliminated in consolidation. The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes; actual results could materially differ from those estimates. The unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") and accordingly do not include all of the disclosures normally made in the Company’s annual condensed consolidated financial statements. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended December 31, 2024, included in the Company’s Annual Report on Form 10-K for fiscal 2024. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. 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; 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. Cash For financial statement purposes, the Company considers all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. Accounts maintained in US bank accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to US$250,000. The Company had US$ 2.2 M and $- 0 - in US bank cash balances in excess of the FDIC insured limit as of September 30, 2025 and December 31, 2024, respectively. Leases The Company accounts for leases pursuant to ASC 842 “Leases”. Accordingly, 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 lease liabilities within current 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 6 for more complete details on balances as of the reporting periods presented herein. 6 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 through cost of goods sold. 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 of, 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. Revenue Recognition Revenue recognition is based on Accounting Standards Codification (ASC) Topic 606 – Revenue from Contracts with Customers. In general, the Company recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the Company, where there is evidence of an arrangement, when the selling price is fixed or determinable, and when specific criteria have been met or there are no significant remaining performance obligations for each of the Company's activities as described below. Revenue is recognized at the point in time when control of the goods or services is transferred to the customer. The Company typically recognizes revenue upon formal acceptance by the customer. Control is considered to be transferred when the customer has the ability to direct the use of and obtain substantially all of the remaining benefits of that good. We consider this the point at which the performance obligation is fulfilled, and the customer obtains control of the promised good or service. ● Products: Revenue is recognized upon delivery and successful customer acceptance (i.e., transfer of risks and rewards as well as physical possession). ● Engineering Services: Revenue is also recognized upon acceptance by the customer, as these services are typically customized and do not provide incremental value until completion. Since control does not transfer over time but rather at a single point (usually project completion or delivery), revenue is recognized at a point in time in accordance with ASC 606-10-25-30 and related guidance. Progress billings on projects where this criteria has not been met are recorded as deferred revenue. Deferred revenue at September 30, 2025 and December 31, 2024 was EUR 0.00 and EUR 0.00 respectively. Additionally, the Company participates in government sponsored collaborations whereby they are awarded participation grants. There is no certainty as to the timing or amounts of grants that will ultimately be received. Accordingly, the company records these grants as other income upon receipt. 7 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. The Company utilizes a binomial lattice option pricing model to estimate the fair value of options, warrants 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 instrument. 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. No income tax has been provisioned for the nine months ended September 30, 2025 and 2024, 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. 8 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. For periods the Company reports a net loss, all outstanding stock options and other dilutive securities are excluded from the calculation of diluted net loss per common share because inclusion of these securities would be anti-dilutive. For the three and nine months ending September 30, 2025, and 2024, basic net income/(loss) per share was EUR( 0.95 ), EUR( 6.56 ) and EUR 4.56 , EUR 48.26 , respectively. Weighted average common shares used were 1,463,101 and 1,449,868 for three months ended September 30, 2025 and 2024, respectively, and 1,454,361 and 1,449,060 for nine months ended September 30, 2025 and 2024, respectively. For the nine months ending September 30, 2025 and 2024 fully diluted income/(loss) per share was EUR 0.72 and EUR 3.58 respectively. Weighted average common shares including all outstanding stock options and other dilutive securities were 9,206,350 and 19,542,240 , 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. 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 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 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. 9 3. Liquidity and Going Concern Analysis 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 these consolidated condensed financial statements are issued. 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 November 30, 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 September 30, 2025, the Company had cash balances of EUR 2.3 million, a working capital surplus of EUR 2.2 million and an accumulated deficit of EUR 314.8 million. For the nine months ended September 30, 2025, the Company had net income of EUR 6.6 million. For the nine months ended September 30, 2025, the Company recorded an operating loss of EUR 5.2 million, had net cash used in operating activities of EUR 5.2 and expects to continue to incur small operating losses and have net cash outflows for at least the next 12 months, offset by cash flows from financing and other business activities. Following certain amendments to our agreements with YA II PN, Ltd. (“Yorkville”) as previously disclosed by the Company, on September 5, 2025 the Company’s ordinary shares commenced trading on the Nasdaq Capital Market under the ticker symbol “SSM.” In connection with such uplisting, the aggregate principal amount available under the Yorkville debenture was increased to $ 7.2 million, including an immediate advance of approximately $ 3.41 million on September 5, 2025, and the previously funded smaller advances in 2025 under earlier omnibus amendments constituted the remaining balance; accordingly, no additional amounts remain available to be drawn under the Yorkville debenture. Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, in light of the Company’s current cash on hand and working capital position together with the Company’s contemplated additional fundraising efforts, cost-reduction measures and commercial development efforts, if consummated as planned and on acceptable terms which cannot be guaranteed, the Company would have sufficient liquidity to meet its obligations within one year from the date of these consolidated financial statements. However, the availability, timing, and terms of any such additional measures, including financing efforts, cannot be assured. Accordingly Management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern. 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 Zahlungsunf ä higkeit ), 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”. 10 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 ( vorl ä ufiger 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 for the year ended December 31, 2023 resulted in a net loss of EUR 21.8 million. Reconsolidation of Sono Motors GmbH On February 29, 2024, the Subsidiary exited its Self-Administration Proceedings via its plan under the German Insolvency Code, which set out how the Subsidiary intended to restructure its debt and procure the inflow of new cash, including pursuant to a funding commitment from Yorkville. As a result, all outstanding debts between the Company and the Subsidiary were extinguished, and the Subsidiary was reconsolidated into our consolidated financial statements effective March 1, 2024. The reconsolidation resulted in a net gain of approximately EUR 62.6 million, reflecting the revaluation of the Subsidiary’s net assets and the extinguishment of parental guarantees and related liabilities. This gain is recorded in our operating results for the three months ended March 31, 2024 and represents the financial impact of regaining control over the Subsidiary. 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 11 5. Property, Plant, and Equipment Property, plant and equipment as of September 30, 2025 and December 31, 2024 were as follows: September 30, 2025 KEUR December 31, 2024 KEUR Machinery & equipment 188 180 Accumulated depreciation ( 82 ) ( 51 ) 106 129 Depreciation expense for the three and nine months ended September 30, 2025 and 2024 was KEUR 16 , KEUR 31 and KEUR 5 , KEUR 27 respectively. 6. Leases The Company leases its office and warehouse space. The lease has a remaining life of 5.6 yrs. The Company accounts for its leases according to ASC 842 Leases. Lease expense was KEUR 42 , KEUR 42 and KEUR 126 , KEUR 98 , for the three and nine months ended September 30, 2025 and 2024, respectively. Maturities of operating lease liabilities were as follows as of September 30, 2025: KEUR 2025 (remaining) 43 2026 167 2027 167 2028 167 2029 and beyond 391 Total Lease payments 935 Less interest 347 Present value of lease payments 588 Balance Sheet Classification Liability as of September 30, 2025 KEUR Liability as of December 31, 2024 KEUR Current 167 58 Long term 421 572 Total Lease 588 630 The lease was calculated over a 122 month period at a discount rate of 18 %. In addition, for the three and nine months ended September 30, 2025 and 2024, the Company recorde d KEUR 11 , KEUR 0.00 and KEUR 18 , KEUR 23 of an operating lease running on a month-to-month basis. 7. Accounts Payable and Accrued Expenses Amounts related to accounts payable and accrued expenses as of September 30, 2025 and December 31, 2024 were as follows: September 30, 2025 KEUR December 31, 2024 KEUR Trade accounts payable 595 575 Other accrued liabilities - - Total accounts payable and accrued liabilities 595 575 12 8. Convertible Notes Payable at Fair Value As of September 30, 2025 and December 31, 2024, the estimated fair value of our convertible debt is as follows: September 30, 2025 KEUR December 31, 2024 KEUR Fair value convertible notes - 24,035 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. On December 30, 2024 the Company and Yorkville entered into a securities purchase agreement (the “Securities Purchase Agreement”) and an exchange agreement (the “Exchange Agreement”). Under the terms of the Securities Purchase Agreement, Yorkville committed to provide limited financing to the Company in the amount of $ 5 million, subject to certain conditions and limitations. Following a number of amendments to the Securities Purchase Agreement the Company issued to Yorkville six additional debentures (“2025 Debentures”) in the amounts of $ 1 million, $ 1 million, $ 0.50 million, $ 0.75 million, $ 0.19 million and $ 0.35 million on February 12, 2025, March 25, 2025, April 24, 2025, May 27, 2025, August 6, 2025 and August 15, 2025 respectively. In connection with the Company’s uplisting to the Nasdaq Capital Market, on September 5, 2025 Yorkville increased the total funding commitment under the terms of the Securities Purchase Agreement from $ 5 million to $ 7.2 million and following the respective amendment the Company issued the final debenture for the remaining part of the total funding commitment, which amounted to $ 3.4 million. According to the terms of the Exchange Agreement and following the uplisting of Company’s Ordinary Shares to the Nasdaq Capital Market, the total amount of all convertible debentures issued by the Company to Yorkville and outstanding as of September 5, 2025, including accrued interest, totalling 42.1 M USD were converted into 1,401 preferred shares with €300 nominal value each (please refer to Note 9 for details on preferred shares). The following table reflects the outstanding debt and accrued interest for each tranche as of September 5, 2025 and December 31, 2024: September 5, 2025 Issue Date Maturity Date Principal KUSD Accrued Interest KUSD Tranch-1 @ 4 % ( 12 % - default rate) December 7, 2022 July 1, 2025 11,100 3,275 Tranch-2 @ 4 % ( 12 % - default rate) December 8, 2022 July 1, 2025 8,150 2,321 Tranch-3 @ 4 % ( 12 % - default rate) December 20, 2022 July 1, 2025 750 214 Tranch-4 @ 12 % ( 18 % - default rate) February 5, 2024 July 1, 2025 4,318 822 Tranch-5 @ 12 % ( 18 % - default rate) August 30, 2024 August 30, 2025 3,338 408 Tranch-6a @ 12 % ( 18 % - default rate) February 12, 2025 February 12, 2026 1,000 68 Tranch-6b @ 12 % ( 18 % - default rate) March 25, 2025 March 24, 2026 1,000 54 Tranch-6c @ 12 % ( 18 % - default rate) April 24, 2025 April 23, 2026 500 22 Tranch-6d @ 12 % ( 18 % - default rate) May 27, 2025 May 26, 2026 750 25 Tranch-6e @ 12 % ( 18 % - default rate) August 6, 2025 August 6, 2026 189 2 Tranch-6f @ 12 % ( 18 % - default rate) August 15, 2025 August 15, 2026 351 3 Tranch-7 @ 12 % ( 18 % - default rate) September 5, 2025 September 5, 2026 3,409 1 Total 34,856 7,215 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 The 2022 Debentures carry a coupon of 4 % and were convertible into common stock at the holder’s option at, the lower of (i) $ 131.25 , 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 the filing with the bankruptcy court. 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 $ 18.75 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 . 13 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 2025, and the August 2024 Debenture has a maturity date of August 2025. The 2025 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 2025 Debenture has a maturity date of February 2026, the March 2025 Debenture has a maturity date of March 2026, the April 2025 Debenture has a maturity date of April 2026, and the May 2025 Debenture has a maturity date of May 2026. 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 September 5, 2025 and December 31, 2024 are as follows: September 5, 2025 (Conversion Date) December 31, 2024 Indexed common shares 7,718,300 18,537,485 Fair value per share $ 2.79 $ 1.24 Total Fair Value of Convertible Notes EUR18,471 EUR24,035 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 September 5, 2025 (Conversion Date) December 31, 2024 Closing price of underlying common equity(1) $ 7.24 $ 4.18 Exercise price $ 4.45 $ 1.75 Volatility of underlying common equity N/A 150 % Remaining term (in years) N/A 1 Risk Free treasury rates N/A 4.18 % Foreign exchange rate at year end USD/EUR 1.17 1.0389 (1) Adjusted for a discount for lack of marketability of 50 %. On September 5, 2025, pursuant to an exchange agreement dated December 30, 2024, as amended , , the debt was exchanged for 1,401 shares of perpetual preferred stock. The Preferred Stock is convertible into common shares at 85 % of the lowest VWAP for the 10 preceding trading days. As part of the commitment, the holder has agreed to a conversion price floor of $ 4.00 for six months and $ 1.00 thereafter. These terms have been embodied into the calculation of fair value as of September 5, 2025. The fair value calculated on September 5, 2025 was EUR 18.5 M indexed to 7,718,300 common shares. The debt was extinguished through the issuance of perpetual preferred stock in the amount of EUR 18.5 M and reclassified into equity. 9. Shareholders ’ Equity As of September 30, 2025, the Company had authorized share capital of 120,000,000 ordinary shares with a nominal value of € 0.01 per share, 40,000 high voting shares with a nominal value of € 0.25 per share and 1,401 preferred shares with a nominal value of € 300 per share with 1,424,186 ordinary shares, 40,000 high voting shares and 1,401 preferred shares issued and outstanding. Each ordinary share confers the right on the holder to cast one vote at the general meeting, each high voting share confers the right on the holder to cast twenty-five votes at the general meeting and each preferred share confers the right on the holder to cast thirty thousand votes at the general meeting, subject to a contractually agreed between the Company and Yorkville voting blocker equal to 4.99% of the combined voting power in the share capital of Sono Group N.V. The preferred shares are convertible at a price per share equal to 85% of the lowest daily volume weighted average price of the Ordinary Shares during the 10 Trading Days immediately preceding the date of the conversion notice, subject to a floor price (the “Floor Price”). Upon the conversion of each Preferred Share, the Investor shall surrender the Preferred Share being converted, plus the Investor will automatically sell and transfer to the Company for no consideration (the “Repurchase”) additional Preferred Shares such that the total number of Preferred Shares surrendered and subject to the Repurchase shall be equal to (a) the total number of Ordinary Shares issuable upon such conversion, multiplied by (b) the Effective Conversion Price, divided by (c) 30,000. The Parties acknowledge that pursuant to Section 2:98 paragraph 2, of the Dutch Civil Code, the Company cannot hold more than half of its issued nominal share capital. If, as a result of the Repurchase the Company will exceed the aforementioned threshold, the Parties hereby agree that such repurchase for no consideration is postponed until the Company has taken appropriate measures. 14 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. On December 30, 2024, the Company entered into an Exchange Agreement with YA II PN, Ltd. (“Yorkville”) (as subsequently amended), pursuant to which Yorkville agreed to exchange all outstanding debentures it held for preferred shares of the Company, subject to closing conditions, including among others the Company’s receipt of notice that its ordinary shares met all requirements for listing on the Nasdaq Capital Market. On August 13, 2025, shareholders approved amendments to the Company’s Articles of Association that, among other things, create the preferred share class and adjust the Company’s authorized share capital, with such amendments to become effective on the Closing Date of the Exchange Agreement. Following receipt of Nasdaq approval on September 4, 2025 and commencement of trading on September 5, 2025 under ticker “SSM”, the conditions to closing were satisfied and the Exchange Agreement closed, resulting in the exchange of Yorkville’s outstanding debentures into preferred shares in accordance with its terms. These corporate actions followed the previously disclosed reverse share split and nominal value adjustments (ordinary shares to € 0.02 ; high-voting shares to € 0.50 ) and, upon the Closing Date of the Exchange Agreement, the effectiveness of the shareholder-approved amendments to the Articles of Association further decreased the nominal value per share to € 0.01 for ordinary shares and € 0.25 for high-voting shares. 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 September 30, 2025 and December 31, 2024 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 42,183 fully vested stock options, each with an exercise price of € 4.5 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. Due to termination of the former supervisory board members no further RSUs were vested in the year 2024 or in the nine months ended September 30, 2025. Hence, there were 19,724 RSUs fully vested as of September 30, 2025 and December 31, 2024. 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 nine months ended September 30, 2025: 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 December 31, 2024 33,689 4.46 0.9 – Granted during the period – Exercised during the period – Forfeited during the period – Outstanding at September 30, 2025 33,689 4.46 0.1 – Exercisable at September 30, 2025 33,689 4.46 0.1 – 15 10. General and Administrative Expenses The table below provides details on general and administrative expenses: Three months ended September 30, Nine months ended September 30, 2025 KEUR 2024 KEUR 2025 KEUR 2024 KEUR Professional fees 539 147 1,569 1,890 Personnel costs 397 471 1,184 1,027 Building lease expense 53 32 154 167 Insurance 27 35 80 105 Software fees and subscriptions 169 45 357 156 Other expenses 46 23 168 282 Total general and administrative expenses 1,231 753 3,512 3,627 11. Research and Development Expenses The table below provides details on research and development expenses: Three months ended September 30, Nine months ended September 30, 2025 KEUR 2024 KEUR 2025 KEUR 2024 KEUR Development costs ( 13 ) 5 67 5 Professional fees 18 166 87 167 Personnel expenses 345 340 1,100 870 Other expenses 85 8 148 34 Total research and development expenses 435 519 1,402 1,076 12. Selling and Distribution Expenses The table below provides details on selling and distribution expenses: Three months ended September 30, Nine months ended September 30, 2025 KEUR 2024 KEUR 2025 KEUR 2024 KEUR Personnel expenses 137 151 516 353 Advertising and marketing 47 45 123 86 Other expenses 2 9 23 9 Total selling and distribution expenses 186 205 662 448 13. 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. 16 Litigation None. 14. Income Tax 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. As the net deferred tax asset is 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 September 30, 2025 and December 31, 2024 are zero . There are no deferred taxes regarding Outside Basis Differences as those are permanent differences. 15. Fair Value of Financial Instruments The carrying amounts of certain financial instruments, including cash and cash equivalents, 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. 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. 17 The following table summarizes the conclusions reached regarding fair value measurements as of September 30, 2025 and December 31, 2024: As of September 30, 2025 KEUR Level 1 Level 2 Level 3 Total Liabilities: Convertible notes payable at fair value – – Total Liabilities – – 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 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 for the nine months ended September 30, 2025 and 2024 were KEUR 11,108 and KEUR 13,100 , respectively. Convertible Notes Payable at Fair Value KEUR Balance December 31, 2024 24,035 Proceeds from new Borrowings 1,928 Fair value measurement (gain)/loss ( 10,331 ) Foreign exchange ( 327 ) Balance March 31, 2025 15,305 Balance March 31, 2025 15,305 Proceeds from new Borrowings 976 Fair value measurement (gain)/loss ( 813 ) Foreign exchange ( 127 ) Balance June 30, 2025 15,341 Balance June 30, 2025 15,341 Proceeds from new Borrowings 3,086 Fair value measurement (gain)/loss 35 Foreign exchange 9 Debt Conversion ( 18,471 ) Balance September 30, 2025 - 16. Subsequent Events Management has determined that no material events or transactions have occurred subsequent to the unaudited condensed consolidated balance sheet date, other than those events noted below, that require disclosure in the unaudited condensed consolidated financial statements. On October 28, 2025, the Company formed the following wholly owned subsidiary: Sono Group S.à r.l., a private limited liability company (société à responsabilité limitée) incorporated under the laws of the Grand Duchy of Luxembourg, having its registered office at 8 Avenue de la Gare, L-1610 Luxembourg, Grand Duchy of Luxembourg. Such subsidiary was funded with € 12,000 for purposes of providing share capital, and it has no operations at this time. 18 Item 2. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed consolidated financial statements and related notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q for the nine months ended September 30, 2025 (this “ Quarterly Report ” ) and our audited consolidated financial statements and related notes thereto for the year ended December 31, 2024, included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “ SEC ” ) on April 17, 2025 (our “ 2024 Form 10-K ” ). This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the section titled “ Risk Factors ” in Part I, Item 1A of our Annual Report 2024 Form 10-K, as updated from time to time in our other filings with the SEC. You should carefully read the section entitled “ Risk Factors ” to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see “ Cautionary Note Regarding Forward-Looking Statements ” below. The events and circumstances reflected in our forward-looking statements may not be achieved or may not occur, and actual results could differ materially from those described in or implied by the forward-looking statements contained in the following discussion and analysis. As a result of these risks, you should not place undue reliance on these forward-looking statements. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law. We conduct our business through our subsidiary Sono Motors GmbH, a German limited liability company (Gesellschaft mit beschr ä nkter Haftung) (the “ Subsidiary ” ). Unless otherwise indicated or the context otherwise requires, the terms “ Sono Motors, ” “ Sono, ” “ the Companies, ” “ we, ” “ our, ” “ ours, ” “ ourselves, ” “ us ” or similar terms refer to Sono Group N.V. together with the Subsidiary. The “ Company ” refers to Sono Group N.V. and the “ Subsidiary ” refers to Sono Motors GmbH. CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that relate to our current expectations and views of future events. These statements relate to events that involve known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors” in Item 1A of Part I of our 2024 Form 10-K, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as “believe,” “may,” “will,” “expect,” “estimate,” “could,” “should,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “forecast,” “project,” “target,” “continue,” “is/are likely to,” “will” or other similar or comparable expressions (including the negative of any of the foregoing). These forward-looking statements include all matters that are not historical facts and are statements regarding our intentions, beliefs, or current expectations. Forward-looking statements involve inherent known and unknown risks, uncertainties and contingencies because they relate to events and depend on circumstances that may or may not occur in the future and could cause our actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about: ● our ability to maintain relationships with lenders, suppliers, customers, employees and other third parties, to pursue new customer arrangements and projects, and to attract, retain and motivate key employees in light of the performance and credit risks associated with our constrained liquidity position and capital structure; ● our ability to comply with the continued listing requirements of the Nasdaq Capital Market; 19 ● our strategies, plan, objectives and goals, including, for example: ○ the successful implementation and management of the pivot of our business to exclusively retrofitting and integrating our solar technology onto third party vehicles; and ○ the successful continued development, sale and delivery of our solar solutions for vehicles and similar products, as well as the continuous advancement of our current technologies and development of new technologies; ● our ability to secure a sufficient number of future customer contracts or otherwise raise the additional funding required beyond the Yorkville Commitment to further develop and commercialize our solar technology and business as well as to continue as a going concern; ● our future business and financial performance, including our ability to turn profitable, scale our operations and build a well-recognized and respected brand cost-effectively; ● our ability to achieve customer acceptance of and demand for our products, including by developing and maintaining relationships with key business partners who are crucial for our operations or who directly deal with end users in our target market; and ● our expectations regarding the development of our industry, market size and the regulatory and competitive environment in which we operate. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions, many of which are beyond our control. In addition, these forward-looking statements reflect our current views with respect to future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are neither promises nor guarantees of future performance. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industries in which we operate may differ materially from those made in or suggested by the forward-looking statements contained in this Quarterly Report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industries in which we operate are consistent with the forward-looking statements contained in this Quarterly Report, those results or developments may not be indicative of results or developments in subsequent periods. Actual outcomes may differ materially from the information contained in the forward-looking statements as a result of a number of factors, including, without limitation: the risks, uncertainties, and assumptions described under “ Risk Factors ” in Item 1A of Part I of our 2024 Form 10-K, “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations ” in this Quarterly Report and elsewhere in this Quarterly Report. Any forward-looking statements made herein speak only as of the date of this Quarterly Report, and you should not rely on forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or achievements reflected in the forward-looking statements will be achieved or will occur. Except as required by applicable law, we undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report or to conform these statements to actual results or revised expectations. Investors and others should note that we may announce material business and financial information to our investors using our investor relations website at https://ir.sonomotors.com. We therefore encourage investors and others interested in the Company to review the information that we make available on our website, in addition to following our filings with the U.S. Securities and Exchange Commission (“SEC”), webcasts, press releases and conference calls. Information contained on our website is not part of this Quarterly Report. 20 Business Overview We are a technology company focused on the development and commercialization of solar integration solutions for commercial vehicles. Our proprietary solar charge controller (MCU) technology enables the seamless integration of solar energy into high- and low-voltage vehicle architectures, reducing fuel consumption and emissions for diesel-powered vehicles and extending battery life for electric vehicles. Our product portfolio includes complete solar solutions for refrigerated trailers, electric buses, commercial vans and trucks, as well as standalone components, such as solar charge controllers (MCUs) and solar modules. We also provide engineering services to assist OEMs and fleet operators in integrating solar technology into their vehicle production processes. Since our pivot to solar-only solutions in early 2023, we have continued to refine and expand our offerings, with an increased focus on OEM partnerships to drive adoption of factory-installed solar solutions. While we have generated limited revenue to date, we believe that our technology has large market potential in addressing the growing demand for cost-saving and emission-reducing energy solutions for commercial fleets. Historically, we have incurred operating losses since our inception; however, in 2024, we recorded an operating profit due to the impact of revaluation gains following the reconsolidation of our operating subsidiary after the termination of the self-administration proceedings with respect to the Companies (the “Self-Administration Proceedings”) in early 2024. This one-time accounting impact significantly influenced our reported net income for the year ending December 31, 2024. In the third quarter of 2025, we reported a net loss of €1.4 million, primarily driven by loss from operation. Our core operations remain in an investment and scaling phase, and we expect to continue incurring operating losses going forward as we expand our product offerings, scale production and establish strategic partnerships. As of September 30, 2025, we had cash and cash equivalents of €2.3 million, and we will require additional funding and/or increased sales to fund operations for at least the next twelve months. There can be no assurance that such funding or sales will be available when needed, on acceptable terms, or at all. We operate as a single business segment, managing our financing, research and development and product commercialization on a consolidated basis. Our financial results reflect a transition from pre-revenue technology development to commercial-scale implementation, and we expect continued volatility as we scale operations. During the third quarter of 2025, we continued our shift toward solar-enabled commercial mobility solutions. Our operating subsidiary was rebranded to Sono Solar to reflect a focus on integrating lightweight photovoltaic systems into vehicle platforms and transport refrigeration. We completed our uplisting to the Nasdaq Capital Market (ticker “SSM”), which we believe enhances our visibility with customers and investors. In connection with the uplisting and pursuant to existing agreements with Yorkville, we closed the exchange of outstanding debentures into preferred shares and received additional funding, simplifying our capital structure and providing incremental liquidity. Operationally, we advanced our go-to-market through collaborations, including a strengthened partnership with Mitsubishi Heavy Industries Thermal Transport Europe around integrated solar for electric refrigerated trailers. Post-quarter, we reported increased commercial engagement at major European trade shows. Collectively, these steps align our organization, capital structure, and partnerships around the objective of reducing energy costs and emissions for commercial fleets through solar integration. Recent Developments On August 7, 2025, we announced that our operating subsidiary Sono Motors GmbH will operate and communicate under the brand name “Sono Solar,” reflecting our strategic focus on solar-enabled mobility solutions. The rebranding emphasizes our role as a solar integration partner for commercial vehicle platforms and transport refrigeration. The legal entity remains Sono Motors GmbH; the change pertains to market-facing branding and positioning. Subsequent communications and releases refer to the subsidiary as operating under the Sono Solar brand, consistent with this strategic focus. On September 5, 2025, our ordinary shares commenced trading on the Nasdaq Capital Market under ticker SSM, which we believe enhances our visibility with customers and investors. In connection with the uplisting, the Company and Yorkville entered into an additional omnibus amendment to the transaction documents that increased the aggregate funding commitment under the Exchange Agreement and Securities Purchase Agreement to $7.2 million and provided an immediate advance of approximately $3.4 million through a secured convertible debenture. These actions satisfied remaining conditions under the Exchange Agreement and supported the exchange of all outstanding convertible debentures into preferred shares. See Notes 8 and 9 to the Financial Statements. On September 9, 2025, George G. O’Leary provided notice of his voluntary resignation as Chief Executive Officer, effective that date, and will support an orderly transition through December 31, 2025. The Supervisory Board nominated Kevin McGurn as Chief Executive Officer; his service agreement and formal election as Managing Director are to be effected in accordance with Dutch corporate requirements. Components of Our Results of Operations Revenue We have not yet generated material revenue from our solar technology solutions. Historically, our revenue has been derived primarily from prototype sales and pilot installations of our solar retrofit solutions, including the Solar Bus Kit. In 2024, we expanded our product offerings to include additional commercial vehicle categories, such as trucks, refrigerated trailers and electric vans. While these developments position us for potential future revenue growth, we expect revenue generation to remain limited in the near term as we focus on finalizing product developments, securing large-scale partnerships with OEMs and fleet operators and ramping up commercial deployments. Given our continued transition to an asset-light business model, revenue growth will depend on our ability to successfully scale our solar technology offerings through direct sales and strategic partnerships. Additionally, regulatory approvals and customer adoption rates will play a critical role in the timing and magnitude of revenue recognition in the coming years. We anticipate that revenue fluctuations may occur as we move from initial pilot programs toward broader commercialization. 21 While we anticipate an increase in revenue as adoption of our solar solutions expands, our future revenue growth is subject to factors including successful commercialization of our technology, scaling production, obtaining additional regulatory approvals and securing long-term contracts with OEMs and fleet operators. Additionally, revenue growth may be affected by macroeconomic conditions, supply chain constraints and shifts in government incentives for renewable energy technologies. Our expected revenue streams include the sale of complete solar solutions, standalone solar products such as solar modules and solar charge controllers, as well as data services and engineering services that support OEM integration and fleet adoption. Our revenue recognition follows standard contract-based policies, with revenue recognized upon delivery of products or completion of contractual obligations. Cost of Sales Historically, our cost of sales has been minimal, reflecting the limited revenue generation from prototype projects and early-stage product deployments. As we scale production and move toward broader commercialization, we expect cost of sales to increase in line with higher manufacturing volumes, supply chain expenditures and product fulfillment costs. Research and Development Expenses We did not record research expenses in prior years, as we did not engage in fundamental research activities. Our development expenses primarily consist of (i) personnel expenses for our development team, including salaries, bonuses and related share-based compensation, (ii) costs associated with prototype development and solar integration, (iii) professional services and (iv) other expenses. Development costs are expensed as incurred, as the recognition criteria for capitalization have not been met. In 2025, research and development expenses continued to decline as we are shifting from early-stage development to commercialization. We intend to focus future investments on optimizing our solar charge controller technology, enhancing solar integration efficiency and supporting OEM partnerships. Selling, General and Administrative Expenses We recognize selling, general and administrative expenses (“SG&A”) on an accrual basis when incurred. These expenses primarily include employee compensation, consultant and professional service fees, legal and compliance costs, marketing and promotional activities, intellectual property-related expenses and general overhead costs. As we continue to scale our operations and expand our market presence, we anticipate SG&A expenses to reflect investments in business development, commercialization efforts and strategic partnerships. Additionally, as a public company, we expect continued costs related to regulatory compliance, financial reporting and investor relations. Other Operating Income/Expenses Other operating income primarily includes government grants, reimbursements for personnel expenses and any non-recurring income. Other operating expenses mainly consist of non-recurring costs. These items may vary from period to period depending on external factors. Gain from Reconsolidation of Subsidiary On February 29, 2024, the Subsidiary exited its Self-Administration Proceedings via its plan under the German Insolvency Code, which set out how the Subsidiary intended to restructure its debt and procure the inflow of new cash, including pursuant to a funding commitment from Yorkville. As a result, all outstanding debts between the Company and the Subsidiary were extinguished, and the Subsidiary was reconsolidated into our consolidated financial statements effective March 1, 2024. The reconsolidation resulted in a net gain of approximately €62.6 million, reflecting the revaluation of the Subsidiary’s net assets and the extinguishment of parental guarantees and related liabilities. This gain is recorded in our 2024 operating results and represents the financial impact of regaining control over the Subsidiary. 22 While this gain had a significant positive effect on our reported 2024 operating results, it does not reflect ongoing business operations or recurring profitability. We expect that our future financial performance will be driven by commercialization of our solar solutions, expansion of OEM partnerships and disciplined cost management. Other Income (Expenses) Other Income (Expenses) primarily consist of fluctuations in fair value of convertible debt carried at fair value as well as gains or losses on foreign currency translation. It also includes interest income and expenses associated with interest-bearing liabilities, including convertible debentures and other financing instruments used to support our operations. These expenses reflect the cost of capital required to fund our business activities and ongoing development efforts. Results of Operations Comparison of the three months ended September 30, 2025 and 2024 Three months ended September 30, 2025 2024 Change (in € thousands) Revenue 49 – 49 Cost of sales (18 ) – (18 ) Gross margin 31 – 31 Operating expenses Selling and distribution expenses (186 ) (205 ) 19 General and administrative expenses (1,231 ) (753 ) (478 ) Research and development (435 ) (519 ) 84 Gain on reconsolidation - - Other operating income/(loss) 250 (4 ) 254 Operating (loss) / income (1,571 ) (1,481 ) (90 ) Other income / (expense) Loss from changes in fair value of convertible debt carried at fair value (35 ) (8,809 ) 8,774 Gain / (loss) on foreign currency translation 215 783 (568 ) Net Loss (1,391 ) (9,507 ) 8,116 Revenue For the three months ended September 30, 2025, we recorded revenue of €49 thousand, while for the three months ended September 30, 2024, we recorded no revenue. Our revenue is generated from the sale of our integrated solar solutions as well as individual components, including solar charge controllers, solar panels, and other assembly materials. Cost of Sales For the three months ended September 30, 2025, we recorded cost of sales of €18 thousand. For the three months ended September 30, 2024, we recorded no cost of sales. Research and Development Expenses For the three months ended September 30, 2025, cost of development expenses decreased to approximately €435 thousand from €519 thousand for the three months ended September 30, 2024. The decrease primarily reflects the reduction in professional fees from €166 thousand for the three months ended September 30, 2024 to €18 thousand for the three months ended September 30, 2025. 23 Selling, General, and Administrative Expenses (SG&A) For the three months ended September 30, 2025, SG&A expenses totaled approximately €1,417 thousand, compared to €959 thousand for the three months ended September 30, 2024. The change reflects an increase in professional fees from €147 thousand for the three months ended September 30, 2024 up to €539 thousand for the three months ended September 30, 2025. Other operating income / expenses For the three months ended September 30, 2025 other operating income amounted to €250 thousand and included €247 thousand from government grants. For the three months ended September 30, 2024 we recorded a net other operating loss of €4 thousand. Income/(expense) from changes in fair value of convertible notes payable carried at fair value For the three months ended September 30, 2025, we recognized a loss of approximately €35 thousand from the fair value measurement of financial liabilities. This loss primarily relates to the revaluation of convertible debentures issued in connection with our financing arrangements, which are accounted for at fair value through profit or loss under U.S. GAAP. For the three months ended September 30, 2024, we recorded a loss of approximately €8,809 thousand from the revaluation of convertible debentures under the same fair value accounting treatment. Gain on Foreign Currency Translation For the three months ended September 30, 2025, we recorded a foreign currency translation gain of approximately €215 thousand, primarily resulting from exchange rate movements impacting Euro-denominated balances. We recognized a net gain from foreign currency translation of approximately €783 thousand for the three months ended September 30, 2024. Net Loss For the three months ended September 30, 2025, we reported a net loss of €1,391 thousand, while for the three months ended September 30, 2024, we reported a net loss of €9,507 thousand. This change was primarily driven by the loss from changes in fair value of convertible notes payable carried at fair value of €35 thousand for the three months ended September 30, 2025 compared to €8,809 thousand loss recorded for the three months ended September 30, 2024. Comparison of the nine months ended September 30, 2025 and 2024 The following table summarizes our consolidated results of operations for the periods indicated: Nine months ended September 30, 2025 2024 Change (in € thousands) Revenue 101 – 101 Cost of sales (57 ) – (57 ) Gross margin 44 – 44 Operating expenses Selling and distribution expenses (662 ) (448 ) (214 ) General and administrative expenses (3,512 ) (3,627 ) 115 Research and development (1,402 ) (1,076 ) (326 ) Gain on reconsolidation - 63,491 (63,491 ) Other operating income 381 66 315 Operating (loss) / income (5,151 ) 58,406 (63,557 ) Other income / (expense) Income from changes in fair value of convertible debt carried at fair value 11,108 13,100 (1,992 ) Gain / (Loss) on foreign currency translation 675 (1,575 ) 2,250 Net Income 6,632 69,931 (63,299 ) Revenue For the nine months ended September 30, 2025, we recorded revenue of €101 thousand, while for the nine months ended September 30, 2024, we recorded no revenue. Our revenue is generated from the sale of our integrated solar solutions as well as individual components, including solar charge controllers, solar panels, and other assembly materials. Cost of Sales For the nine months ended September 30, 2025, we recorded cost of sales of €57 thousand. For the nine months ended September 30, 2024, we recorded no cost of sales. 24 Research and Development Expenses For the nine months ended September 30, 2025, cost of development expenses increased to approximately €1,402 thousand from €1,076 thousand for the nine months ended September 30, 2024. The increase primarily reflects improvements and refinements to our solar technology. Selling, General, and Administrative Expenses (SG&A) For the nine months ended September 30, 2025, SG&A expenses totaled approximately €4,174 thousand, compared to €4,075 thousand for the nine months ended September 30, 2024. The relatively stable level of SG&A expenses reflects the Company’s financial discipline and the dynamics of revenue growth. The largest components of SG&A expenses in the nine months ended September 30, 2025 as well as in the nine months ended September 30, 2024 were payroll and social contributions, and legal, audit and other advisory services. Other operating income / expenses For the nine months ended September 30, 2025 other operating income amounted to €381 thousand and included €247 thousand from government grants. For the three months ended September 30, 2024 we recorded a net other operating income of €66 thousand. Gain (Loss) on deconsolidation/reconsolidation For the nine months ended September 30, 2024, we recognized a gain of approximately €63,491 thousand in connection with the reconsolidation of the Subsidiary following its exit from its Self-Administration Proceedings. This gain primarily reflects the extinguishment of certain liabilities and the re-recognition of net assets upon regaining control of the Subsidiary. For the nine months ended September 30, 2025, we recorded no gain or loss in connection to reconsolidation of the Subsidiary. Income/(expense) from changes in fair value of convertible notes payable carried at fair value For the nine months ended September 30, 2025, we recognized a gain of approximately €11,108 thousand from the fair value measurement of financial liabilities. This gain primarily relates to the revaluation of convertible debentures issued in connection with our financing arrangements, which are accounted for at fair value through profit or loss under U.S. GAAP. For the nine months ended September 30, 2024, we recorded a gain of approximately €13,100 thousand from the revaluation of convertible debentures under the same fair value accounting treatment. Gain (Loss) on Foreign Currency Translation For the nine months ended September 30, 2025, we recorded a foreign currency translation gain of approximately €675 thousand, primarily resulting from exchange rate movements impacting Euro-denominated balances. We recognized a net loss from foreign currency translation of approximately €1,575 thousand for the nine months ended September 30, 2024. Net Income For the nine months ended September 30, 2025, we reported net income of €6,632 thousand, while for the nine months ended September 30, 2024, we reported a net income of €69,931 thousand. This change in net income was primarily driven by the €63,491 thousand reconsolidation gain recognized upon regaining control of our Subsidiary after the completion of its Self-Administration Proceedings in the first quarter of 2024. Looking ahead, we anticipate incurring operating losses in future periods as we continue to scale our operations, invest in research and development and expand our commercial footprint. Our long-term financial performance will depend on successful commercialization of our ViPV solutions, revenue growth from OEM partnerships and standalone product sales and efficient cost management. 25 Liquidity and Capital Resources As of September 30, 2025, our cash was €2,250 thousand, compared to €1,354 thousand as of December 31, 2024. Cash consists of cash in bank accounts. We do not currently generate material revenue from operations and continue to incur operating expenses related to the commercialization of our solar technology, general and administrative functions and development activities. Our liquidity position is highly dependent on external financing, including equity and equity-linked financings, debt instruments and strategic partnerships. Sources and Uses of Liquidity Historically, we have financed our operations through: ● Equity and equity-linked financings, including our initial public offering (“IPO”) in November 2021, a follow-on offering in May 2022 and a committed equity facility entered into in June 2022. ○ On November 17, 2021, the Company consummated its IPO of 10,000,000 Ordinary Shares at a price of $15.00 per share. In addition, the underwriters in our IPO exercised their greenshoe option to purchase an additional 1,500,000 ordinary shares (“Ordinary Shares”) at a price of $13.95 per share. In total, the Company raised $160 million (€142 million) through the IPO, after deducting underwriting discounts and commissions. ○ The Company successfully completed a follow-on offering on May 3, 2022 of 10,930,000 Ordinary Shares at a price of $4.00 per share, which amount included shares sold pursuant to the partial exercise of the underwriters’ over-allotment option. Pursuant to the offering, the Company received proceeds of $42 million (€39 million) after deducting underwriting discounts and commissions. ○ On June 13, 2022, the Company entered into an ordinary share purchase agreement with Joh. Berenberg, Gossler & Co. KG (“Berenberg”), which governed a committed equity facility (the “CEF”) for the Company. The CEF provided the Company with the right, but not the obligation, to sell and issue up to $150 million of its Ordinary Shares over a period of 24 months to Berenberg, subject to certain limitations and conditions. During 2022, the Company sold to Berenberg a total of 8,748,433 Ordinary Shares for total gross proceeds of $17 million (€17 million). ● The 2022 Convertible Debentures (as defined below) issued to Yorkville pursuant to the securities purchase agreement in December 2022 and subsequent amendment in 2024. ○ On December 7, 2022, the Company entered into a securities purchase agreement with Yorkville under which the Company agreed to sell and issue to Yorkville debentures (the “2022 Convertible Debentures”) in a gross aggregate principal amount of up to $31.1 million (€29.4 million). ○ In the context of the former Self-Administration Proceedings and in connection with Yorkville’s commitment to provide limited financing (the “First Commitment”) to the Company pursuant to a funding commitment letter (the “Funding Commitment Letter”), the Companies entered into certain investment-related 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 pursuant to which Yorkville committed additional financing to the Company (the “Second Commitment” and together with the First Commitment, the “Yorkville Restructuring Investment”). ○ 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. ○ On December 30, 2024, the Company and Yorkville entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), pursuant to which the Company agreed to sell and issue to Yorkville a new convertible debenture (the “New Commitment Debenture”) in the aggregate principal amount of $5 million (the “Yorkville Commitment”). 26 ○ On February 12, 2025, the Company and Yorkville entered into an Omnibus Amendment to Transaction Documents, 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 $1,000,000 secured convertible debenture (the “First Advance Debenture”). ○ On March 25, 2025, the Company and Yorkville entered into a third Omnibus Amendment to Transaction Documents, 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 a $1,000,000 secured convertible debenture (the “Second Advance Debenture”). ○ On April 24, 2025, the Company and Yorkville entered into a fourth 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 $500,000 of the Yorkville Commitment in the form of a $500,000 secured convertible debenture (the “Third Advance Debenture”). ○ On May 27, 2025, the Company and Yorkville entered into a fifth 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 $750,000 of the Yorkville Commitment in the form of a $750,000 secured convertible debenture (the “Fourth Advance Debenture”). ○ On August 6, 2025, the Company and Yorkville entered into an eighth 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 $190,000 of the Yorkville Commitment in the form of a $190,000 secured convertible debenture (the “Fifth Advance Debenture” and together with the First Advance Debenture, the Second Advance Debenture, the Third Advance Debenture and the Fourth Advance Debenture, the “Advance Debentures”). ○ On August 15, 2025, the Company and Yorkville entered into an ninth 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 $350,540 of the Yorkville Commitment in the form of a $350,540 secured convertible debenture (the “Sixth Advance Debenture”). ○ On September 5, 2025, the Company and Yorkville entered into a tenth Omnibus Amendment, pursuant to which the parties agreed to modify the terms of the Securities Purchase Agreement to, among other things, (1) increase the aggregate principal amount of the Debenture by an additional $2,200,000 for a total of $7,200,000, (2) provide for an immediate advance by Yorkville to the Company of $3,409,460, which comprises of the remaining $1,209,460 of the original $5,000,000 commitment and the entirety of the additional $2,200,000 commitment, in the form of a secured convertible debenture in the aggregate principal amount of $3,409,460 (the “Seventh Advance Debenture” and together with the First Advance Debenture, the Second Advance Debenture, the Third Advance Debenture, the Fourth Advance Debenture, the Fifth Advance Debenture and the Sixth Advance Debenture, the “Advance Debentures”). ○ On December 30, 2024, the Company and Yorkville also entered into the Exchange Agreement (the “Exchange Agreement”), pursuant to which the Company agreed to issue, subject to the satisfaction of certain closing conditions, 1,242 preferred shares to Yorkville solely in exchange for the surrender and cancellation of all of the debentures held by Yorkville, including the 2022 Convertible Debentures, the convertible debentures issued to Yorkville on February 5, 2024 and August 30, 2024, the New Commitment Debenture (if issued) and the Advance Debentures (the “Debt Conversion”). ○ On September 5, 2025, following receipt on September 4, 2025 of Nasdaq’s notification that the Company’s ordinary shares were approved for listing on the Nasdaq Capital Market, the conditions to closing under the Exchange Agreement were satisfied and the Exchange Agreement closed; at closing, all outstanding convertible debentures of the Company, together with accrued interest, were exchanged into 1,401 preferred shares, reflecting the issuance of additional advance debentures and interest accrued through the closing date, September 5, 2025. ● Limited grant funding from government and public research institutions, supporting the development of our proprietary solar technology. ● Limited revenues from sale of prototypes, our solar products and services. Our cash outflows have primarily been driven by: ● Research and development expenditures, including product testing, solar module validation and MCU development. ● General and administrative costs, such as payroll, legal and advisory services and public company compliance costs. ● Investment in commercialization efforts, including OEM partnerships and vehicle integration projects. Future Capital Needs and Outlook The Company has cash and cash equivalents of €2.3million and a working capital position of €2.2 million. However we will require additional funding and/or increased sales to fund operations for at least the next twelve months. There can be no assurance that such funding or sales will be available when needed, on acceptable terms, or at all. We are actively evaluating a mix of financing options, including: ● Additional equity or debt financings, subject to market conditions. ● Non-dilutive funding sources, such as government grants and strategic collaborations. ● Revenue generation from sales of our solar solutions and engineering services, which we expect to ramp up over time. 27 Our future financing requirements will depend on many factors, including, among others: ● the market’s willingness to adopt solar-powered mobility solutions; ● our ability to successfully commercialize our proprietary solar technology in time or at all; ● our ability to comply with the continued listing requirements of the Nasdaq Capital Market; ● our ability to develop installation processes and capabilities within our projected costs and timelines; ● the costs of raw materials or certain products; ● our ability to obtain or agree on acceptable terms and conditions on all or a significant portion of the government grants, loans and other incentives for which we may apply; ● our ability to establish a network for aftersales customer service or otherwise successfully address the service and maintenance requirements of our customers; ● any product liability or other lawsuits related to our products; and ● the costs of operating as a public company. If we are unable to secure additional funding on acceptable terms, we may be required to adjust our growth strategy, delay development projects or pursue alternative financing solutions. Going Concern Considerations We have historically relied on external financing to fund our operations, and as of September 30, 2025, we had cash of €2.3 million. Based on our current operating plan and if we are able to successfully complete the planned fund raising activities, we anticipate that our existing cash resources will be sufficient to fund our business operations through the end of the third quarter of 2026. However, our ability to continue as a going concern is dependent on our ability to either secure a sufficient number of future customer contracts or secure additional capital. If we are unable to obtain sufficient funding, we may need to modify our operating plans, reduce costs or pursue alternative financing strategies. Management continues to evaluate financing alternatives, and we remain confident in our ability to raise the necessary capital to execute our business plan, especially considering the recent listing of the Company’s ordinary shares on the Nasdaq Capital Market. Based upon this uncertainty, our management has concluded that there is substantial doubt that the company will continue as a going concern. Cash Flows The table below summarizes our cash flows (used in) from operating, investing and financing activities for the nine months ended September 30, 2025 and 2024. Nine months ended September 30, 2025 2024 (in € thousands ) Net cash used in operating activities (5,182 ) (13,491 ) Net cash (used in) / provided by investing activities (8 ) 1,299 Net cash from financing activities 6,075 7,000 Effect of currency translation on cash and cash equivalents 11 - Net increase / (decrease) in cash 896 (5,192 ) Cash and cash equivalents at the beginning of the period 1,354 7,412 Cash at end of the period 2,250 2,220 28 Net cash used in operating activities Net cash used in operating activities decreased from €13,491 thousand in the nine months ended September 30, 2024 to €5,182 thousand for the nine months ended September 30, 2025. The decrease was primarily driven by higher cash outflows for the nine months ended September 30, 2024 related to the restructuring process. Net cash provided by investing activities Net cash used in investing activities in the nine months ended September 30, 2024 amounted to €8 thousand. Net cash provided by investing activities in the nine months ended September 30, 2024 was €1,299 thousand with the €1,305 amount related to reconsolidation of the Subsidiary cash balance, while €6 thousand were used for acquisition of equipment. Net cash from financing activities Net cash provided by financing activities was €6,075 thousand in the nine months ended September 30, 2025, resulting from proceeds received in connection with the issuance of convertible notes and ordinary shares. For the nine months ended September 30, 2024, net cash provided by financing activities amounted to €7,000 thousand, resulting from the proceeds received in connection with the issuance of convertible notes. Critical Accounting Policies and Estimates Our critical accounting policies are disclosed in Note 2 of the notes to our consolidated financial statements included in Part II, Item 8 of the 2024 Form 10-K. Since the date of such financial statements, there have been no material changes to our significant accounting policies. Item 3. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, we are not required to provide the information required by this Item. 29