Sono Group N.V. 10-K

Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market for Ordinary Shares Our Ordinary Shares are listed on the Nasdaq Stock Market LLC, and commenced trading on the Nasdaq Capital Market under the symbol “SSM” on September 5, 2025. From November 17, 2021 through February 25, 2024, our Ordinary Shares were listed on the Nasdaq Global Market under the symbol “SEV.” On July 21, 2023, trading of our Ordinary Shares on the Nasdaq Global Market was suspended. On December 11, 2023, we received a decision of the Panel advising us that the Panel had determined to delist the Ordinary Shares from the Nasdaq Global Market. Nasdaq filed a Form 25 Notification of Delisting with the SEC on February 15, 2023 to complete the delisting. On July 2, 2024 our Ordinary Shares commenced quoting on OTCQB under the ticker symbol “SEVCF” and continued to be quoted on OTCQB until September 5, 2025 when our Ordinary Shares commenced trading on the Nasdaq Capital Market as described above. Record Holders As of March 25, 2026, there were 15 holders of record of our Ordinary Shares, one of which was Cede & Co., a nominee for Depository Trust Company (“DTC”), one holder of record of our High Voting Shares and one holder of record of our Preferred Shares. Ordinary Shares that are held by financial institutions as nominees for beneficial owners or in “street name” are deposited into participant accounts at DTC and are considered to be held of record by Cede & Co. as one shareholder. Dividends To date, we have not paid any dividends on our shares, and we do not anticipate paying any cash dividends on our shares in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. As a Dutch entity and under Dutch law, we may only pay dividends to the extent our shareholders’ equity (eigen vermogen) exceeds the sum of the paid-in and called-up share capital plus the reserves required to be maintained by Dutch law or by our articles of association and (if it concerns a distribution of profits) after adoption of the annual accounts by the general meeting from which it appears that such dividend distribution is allowed. Subject to such restrictions, any future determination to pay dividends or other distributions from our reserves will be at the discretion of our management board with the approval of our supervisory board and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors our management board and supervisory board deem relevant. Securities Authorized for Issuance under Equity Compensation Plans See Item 12, Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters , of Part III of this Annual Report for information relating to securities authorized for issuance under our equity compensation plans. Recent Sales of Unregistered Securities Please refer to our Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC for information regarding our sales of unregistered securities during the fiscal year ended December 31, 2025. Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the fourth quarter of the fiscal year ended December 31, 2025, and no repurchases were made on our behalf by any affiliated purchaser. Item 6. [Reserved] Item 7. 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 audited consolidated financial statements and related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving risks and uncertainties, as well as assumptions, that if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “ Cautionary Note Regarding Forward-Looking Statements ” and “ Risk Factors ” and in other parts of this Annual Report. Overview For the year ended December 31, 2025, we were a technology company focused on the development and commercialization of solar integration solutions for commercial vehicles. Our proprietary solar charge controller (MCU) technology enabled 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. Subsequent to December 31, 2025, the Company adopted the Treasury Strategy and initiated an exit from its legacy solar operations. 56 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 Sono Motors GmbH after the termination of the Self-Administration Proceedings in early 2024. This one-time accounting impact significantly influenced our reported net income for the year ended December 31, 2024. In 2025, we recorded an operating loss of €7.7 million, although our net income for the same period was positive and amounted to €4.0 million, primarily due to recorded gains in the fair value of convertible debentures carried at fair value. Subsequent to December 31, 2025, we implemented a series of actions that we believe fundamentally alter our cost structure and liquidity profile on a going-forward basis. In March 2026, we raised gross proceeds of approximately $5.0 million, consisting of a $3.0 million convertible debenture and a pre-funded warrant issued in a private placement for aggregate proceeds of approximately $2.0 million, adopted our Treasury Strategy and entered into an institutional framework with Blockchain.com (BVI) II Limited in the form of the ISDA Master Agreement and the related Schedule and Credit Support Annex, to facilitate related derivative and hedging transactions in connection with our digital asset holdings, and terminated current and future funding commitments to the Subsidiary (Sono Motors GmbH) and initiated our exit from the legacy solar operations conducted through the Subsidiary, which is expected to materially reduce the Company’s ongoing cash outflows. Management believes these actions, taken together, may provide sufficient resources to fund our streamlined operating plan for at least twelve months from the date the financial statements are issued. However, our ability to maintain adequate liquidity remains subject to significant uncertainties, including the price volatility and liquidity characteristics of digital assets, the potential collateral requirements under our Treasury Strategy, the timing and costs associated with exiting our legacy solar operations, which we are currently unable to estimate, and the maturity of our outstanding convertible debenture in March 2027. See “ Liquidity Outlook and Ability to Continue as a Going Concern ” below. As of December 31, 2025, we operated 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. Subsequent to December 31, 2025, we determined in the first quarter of fiscal 2026 to adopt the Treasury Strategy and exit our legacy solar business, as described above. See “— Recent Developments ” below for additional information. Components of our Results of Operations Revenue Historically, our revenue has been derived primarily from prototype sales and pilot installations of our solar retrofit solutions, including the Solar Bus Kit, across commercial vehicle categories such as buses, trucks, refrigerated trailers and electric vans. We have not generated material revenue from our solar technology solutions to date, and revenue for the year ended December 31, 2025 remained limited, reflecting the early-stage nature of our commercial deployments. Subsequent to December 31, 2025, following our adoption of the Treasury Strategy and the initiation of our exit from legacy solar operations, we do not expect to generate revenue from solar technology activities in future periods. Going forward, the Company's financial performance will depend principally on the cash flows generated through the Treasury Strategy rather than product or service revenues. 57 Cost of Sales For the year ended December 31, 2025, we incurred limited cost of sales, reflecting the limited initial revenue generation from prototype projects and early-stage product deployments. Our cost of sales consisted mostly of material costs and personnel expenses. Subsequent to December 31, 2025, following our adoption of the Treasury Strategy and the initiation of our exit from legacy solar operations, we do not expect to incur any cost of sales in future periods. 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 increased, reflecting our technology optimization efforts as well as efforts directed on establishing long-term partnerships and collaborations with OEMs. Subsequent to December 31, 2025, following our adoption of the Treasury Strategy and the initiation of our exit from legacy solar operations, we do not expect to incur any research and development expenses in future periods Selling and Distribution Expenses We recognize selling and distribution expenses on an accrual basis when incurred. These expenses primarily include personnel expenses associated with our sales and business development functions, advertising and marketing costs incurred in connection with promoting our solar technology solutions and establishing new commercial partnerships, and other selling-related costs. Subsequent to December 31, 2025, following our adoption of the Treasury Strategy and the initiation of our exit from legacy solar operations, we anticipate selling and distribution expenses to decrease significantly in future periods as commercial activities associated with our solar technology business are wound down. General and Administrative Expenses We recognize general and administrative expenses on an accrual basis when incurred. These expenses primarily include professional fees (comprising consultant, legal, audit and compliance costs), personnel costs, insurance, software fees and subscriptions, and other general overhead costs. As a public company listed on the Nasdaq Capital Market, we also incur ongoing costs related to regulatory compliance, financial reporting, investor relations and corporate governance. We anticipate general and administrative expenses to continue to reflect the costs associated with maintaining our public company infrastructure and supporting our broader operational and strategic objectives. Other Operating Income/Expenses Other operating income primarily includes government grants and any non-recurring income. Other operating expenses mainly consist of foreign exchange losses from currency conversions and other non-operating costs. These items may vary from period to period depending on external factors such as exchange rate fluctuations and grant allocations. Gain from Reconsolidation of Subsidiary On February 29, 2024, the Subsidiary exited its Self-Administration Proceedings via the Plan. 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. 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 depend principally on the cash flows generated through the Treasury Strategy. In line with these expectations there was no gain from reconsolidation recorded for the fiscal year ended December 31, 2025. Interest and Similar Expenses Interest expenses primarily consist of costs 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. 58 Results of Operations The following table summarizes our consolidated results of operations for the periods indicated: For the year ended December 31, 2025 2024 Change (in € thousands) Revenue 149 0 149 Cost of sales (92 ) (0 ) (92 ) Gross margin 57 0 57 Operating expenses Selling and distribution expenses (877 ) (678 ) (199 ) General and administrative expenses (5,073 ) (4,648 ) (425 ) Research and development (1,817 ) (1,118 ) (698 ) Gain on reconsolidation - 62,554 (62,554 ) Other operating income 13 398 (385 ) Operating (loss) / income (7,697 ) 56,508 (64,205 ) Other income / (expense) Income from changes in fair value of convertible debt carried at fair value 11,108 8,923 2,185 Gain / (loss) on foreign currency translation 604 (405 ) 1,009 Net income 4,015 65,026 (61,011 ) Revenue For the year ended December 31, 2025, we recorded €149 thousand of revenue, while for the year ended December 31, 2024, we recorded no revenue. Our focus during these periods was on refining our solar technology, obtaining regulatory approvals and securing strategic partnerships. While we have successfully developed and tested our ViPV solutions and solar charge controllers, commercial-scale adoption and revenue generation are expected to develop and evolve in future periods as we transition from pilot projects to broader market deployment. Cost of Sales For the year ended December 31, 2025, we recorded cost of sales in the amount of €92 thousand. For the year ended December 31, 2024, we recorded no cost of sales, as we did not generate revenue during this period. Research and Development Expenses For the year ended December 31, 2025, cost of development expenses increased to approximately €1,817 thousand from €1,118 thousand for the year ended December 31, 2024, representing a growth of 63%. The increase primarily reflects our technology optimization efforts, efforts directed on establishing long-term partnerships and collaborations with OEMs, as well as specific improvements and refinements to our solar technology. 59 Selling and Distribution Expenses For the year ended December 31, 2025, Selling and Distribution expenses amounted to €877 thousand, compared to €678 thousand for the year ended December 31, 2024, representing a growth of 29%. The increase is primarily attributable to higher personnel expenses of €128 thousand, reflecting the expansion of our commercialization efforts, as well as an increase in advertising and marketing costs of €53 thousand driven by our expanded efforts to establish new partnerships and pursue new project opportunities. General, and Administrative Expenses (G&A) For the year ended December 31, 2025, G&A expenses totaled approximately €5,073 thousand, compared to €4,648 thousand for the year ended December 31, 2024, representing an increase of 9%. The increase was primarily driven by a growth in professional fees and software fees and subscriptions. The largest components of G&A expenses in 2025 were payroll and social contributions, and legal, audit and other advisory services, similar to our 2024 G&A expenses structure. Other Operating Income/Expenses For the year ended December 31, 2025, other operating income and other operating expenses resulted in a net balance of approximately €13 thousand. For the year ended December 31, 2024, other operating income and expenses resulted in a net balance of approximately €398 thousand. The decrease of approximately €385 thousand, or 97%, was primarily attributable to a significant reduction in government grants recognized during 2025 compared to 2024, which had been a principal contributor to other operating income in the prior year. Gain (Loss) on reconsolidation For the year ended December 31, 2025, there was no gain or loss recorded in connection with the reconsolidation of the Subsidiary, since the reconsolidation was finalized in 2024. For the year ended December 31, 2024, we recognized a gain of approximately €62.6 million in connection with the reconsolidation of the Subsidiary following its exit from its Self-Administration Proceedings. This gain primarily reflected the extinguishment of certain liabilities and the re-recognition of net assets upon regaining control of the Subsidiary. Income from changes in fair value of convertible notes payable carried at fair value For the year ended December 31, 2025, we recorded 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 year ended December 31, 2024, we recognized a gain of approximately €8,923 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. Gain (Loss) on Foreign Currency Translation For the year ended December 31, 2025, we recorded a foreign currency translation gain of approximately €604 thousand, primarily resulting from favorable exchange rate movements impacting Euro-denominated balances. We recognized a foreign currency translation loss of approximately €405 thousand for the year ended December 31, 2024. 60 Net Income For the year ended December 31, 2025, we reported net income of €4,015 thousand, marking a significant decrease from the net income of €65,026 thousand recorded for the year ended December 31, 2024. While net income for the year ended December 31, 2024 was driven by the gain from the consolidation of the Subsidiary as well as by the income from changes in fair value of convertible debt carried at fair value, in the year ended December 31, 2025 we recorded no gains on reconsolidation and the net income for this period is attributed mostly to the income from changes in fair value of convertible debt carried at fair value. For the year ended December 31, 2025, we reported an operating loss of €7,697 thousand, reflecting the early-stage nature of our business and investments in technology development, commercialization and operational scaling. Looking ahead, subsequent to December 31, 2025, the Company adopted the Treasury Strategy and initiated an exit from its legacy solar operations. As a result, we anticipate that future operating losses will be materially reduced compared to historical periods, as the primary source of our historical cash consumption has been eliminated. Our long-term financial performance will depend on the successful implementation of the Treasury Strategy, the cash flows generated through our digital asset holdings, and efficient management of our streamlined holding company cost structure. There can be no assurance that the Treasury Strategy will generate the anticipated returns or that additional financing will not be required. See "Liquidity Outlook and Ability to Continue as a Going Concern" below and “Note 16 Subsequent Events” for additional information.. Liquidity and Capital Resources As of December 31, 2025, our cash was €206 thousand, compared to €1,354 thousand as of December 31, 2024. Cash consists of cash in bank accounts. We have not generated material revenue from operations and we continue to incur operating expenses related to our holding company overhead and public company compliance costs. Following the adoption of the Treasury Strategy and the cessation of funding to the Subsidiary (Sono Motors GmbH) in the first quarter of 2026, our liquidity position is principally dependent on the performance of our digital asset holdings and the cash flows generated through the Treasury Strategy, supplemented as necessary by external financing, including equity and equity-linked financings and debt instruments. Sources and Uses of Liquidity Historically, we have financed our operations through: ● Equity and equity-linked financings, including our 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 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). 61 ● The 2022 Debentures issued to Yorkville pursuant to the securities purchase agreement in December 2022 and subsequent issuances in 2024 and 2025. ○ 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 the 2022 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 the First Commitment, the Companies entered into the Yorkville Investment Agreements with Yorkville in mid-November 2023, and on April 30, 2024, the Company and Yorkville entered into an amendment to the Funding Commitment Letter in connection with the Second Commitment. ○ 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 the Securities Purchase Agreement, pursuant to which the Company agreed to sell and issue to Yorkville the New Commitment Debenture in the aggregate principal amount of $5 million. ○ On December 30, 2024, the Company and Yorkville also entered into 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, which at that time included the 2022 Debentures, the 2024 Debentures and the New Commitment Debenture (if issued). ○ On February 12, 2025, the Company and Yorkville entered into the First Omnibus Amendment, pursuant to which the parties agreed to modify the terms of the Securities Purchase Agreement to, among other things, provide for an immediate advance of $1,000,000 of the Yorkville Commitment in the form of the First Debenture. ○ On March 25, 2025, the Company and Yorkville entered into the Third Omnibus Amendment, pursuant to which the parties agreed to modify the terms of the Securities Purchase Agreement to, among other things, provide for an immediate advance of $1 million of the Yorkville Commitment in the form of the Second Debenture. ○ On April 24, 2025, the Company and Yorkville entered into the Fourth 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 by Yorkville to the Company of $500,000 in the form of the Third Debenture. ○ On May 26, 2025, the Company and Yorkville entered into the Fifth 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 by Yorkville to the Company of $750,000 in the form of the Fourth Debenture. ○ On August 6, 2025, the Company and Yorkville entered into the Eighth 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 by Yorkville to the Company of $190,000 in the form of the Fifth Debenture. ○ On August 15, 2025, the Company and Yorkville entered into the Ninth 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 by Yorkville to the Company of EUR300,000 ($350,540 at conversion rate of 1.1685) in the form of the Sixth Debenture. ○ On September 5, 2025, the Company and Yorkville entered into the Tenth Omnibus Amendment to Transaction Documents, 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, and (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 the Seventh Debenture. 62 Subsequent to the fiscal year ended December 31, 2025: ○ On January 26, 2026, the Company issued the Debenture SEV-8 to Yorkville in the aggregate principal amount of $600,000. ○ On February 19, 2026, the Company issued the Debenture SEV-9 to Yorkville in the aggregate principal amount of $750,000. ○ On March 10, 2026, the Company issued a pre-funded warrant to Yorkville to purchase up to 283,367 Ordinary Shares at an exercise price of €0.01 per share, for aggregate gross proceeds of approximately $2,000,004.29. ○ On March 10, 2026, the Company issued a convertible debenture to Yorkville in the aggregate principal amount of $3,000,000, maturing on March 10, 2027 (“Debenture SEV-10”). ● 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. Liquidity Outlook and Ability to Continue as a Going Concern The Company has incurred recurring operating losses and negative cash flows from operations since inception, primarily attributable to the operations of its solar technology subsidiary, Sono Motors GmbH. For the year ended December 31, 2025, the Company recorded a net operating loss of €7.7 million and negative operating cash flows of €7.3 million, and as of December 31, 2025 had an accumulated deficit of €317.4 million. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Subsequent to December 31, 2025, the Company has implemented a series of actions intended to improve liquidity and reduce ongoing cash requirements. These actions, which are more fully described in “ Item 17 – Subsequent Events ” of Part II, Item 8 of this Annual Report, included: (i) raising gross proceeds of approximately $5.0 million in March 2026, consisting of a $3.0 million convertible debenture and a pre-funded warrant issued in a private placement for aggregate proceeds of approximately $2.0 million; (ii) adopting the Treasury Strategy, and entering into an institutional framework with Blockchain.com (BVI) II Limited in the form of the ISDA Master Agreement and the related Schedule and Credit Support Annex, to facilitate related derivative and hedging transactions in connection with the Company’s digital asset holdings; and (iii) terminating current and future funding commitments to the Subsidiary (Sono Motors GmbH) and initiating our exit from the legacy solar operations conducted through the Subsidiary, which is expected to materially reduce the Company’s ongoing cash outflows. Management believes that these actions, taken together, may provide sufficient resources to fund the Company’s streamlined operating plan under the Treasury Strategy, consisting principally of holding company overhead and public company compliance costs, for at least twelve months from the date the financial statements are issued. However, the Company’s ability to maintain adequate liquidity remains subject to significant uncertainties, including, among other things, the price volatility and liquidity characteristics of digital assets, the terms and potential collateral requirements of transactions entered into in connection with the Treasury Strategy, the timing and costs associated with exiting the legacy solar operations (which the Company is currently unable to estimate), and that the Company’s outstanding convertible debenture issued to Yorkville in the first quarter of fiscal 2026 will reach maturity in March 2027, which may require us to negotiate a refinancing or conversion of the debenture prior to or at maturity. See “ Note 16 – Subsequent Events ” in Part II, Item 8 of this Annual Report for information regarding our financing arrangements with Yorkville subsequent to the fiscal year ended December 31, 2025. Cash Flows The table below summarizes our cash flows provided by / (used in) operating, investing and financing activities for the years ended December 31, 2025 and 2024. For the year ended December 31, 2025 2024 (in € thousands) Cash provided by / (used in): Operating activities (7,254 ) (14,330 ) Investing activities – 1,225 Financing activities 6,078 7,000 Effects of currency translation on cash and cash equivalents 28 47 Net change in cash (1,148 ) (6,105 ) Cash and cash equivalents at the beginning of the period 1,354 7,412 Cash at end of the period 206 1,354 63 Net cash used in operating activities Net cash used in operating activities decreased from €14,284 thousand in the year ended December 31, 2024 to €7,254 thousand in the year ended December 31, 2025. The decrease was primarily driven by lower cash outflows related to changes in working capital. Net cash used in investing activities We had no investing activities during the year ended December 31, 2025. Net cash provided by investing activities was €1,226 thousand in the year December 31, 2024, primarily attributable to the reconsolidation of the Subsidiary cash balance. Net cash from (used in) financing activities Net cash provided by financing activities was €6,078 thousand in the year ended December 31, 2025, resulting primarily from proceeds received in connection with the issuance of convertible notes. For the year ended December 31, 2024, net cash provided by financing activities was €7,000 thousand, resulting from proceeds received in connection with the issuance of convertible notes. Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. We base our estimates on historical experience, known trends and other market-specific or relevant factors that we believe to be reasonable under the circumstances. On an ongoing basis, management evaluates its estimates when there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. If actual results differ from our estimates, or to the extent these estimates are adjusted in future periods, our results of operations could either benefit from or be adversely affected by any such change in estimate. Our most critical accounting estimate is our fair value assessments of financial instruments. Changes in these estimates and assumptions could materially affect our reported results. For instance, a change in the estimated fair value of financial instruments could result in significant variations in net income. See Note 2 to our consolidated financial statements included in Part II, Item 8 of this Annual Report for a summary of significant accounting policies and the effect on our consolidated financial statements. Recent Developments Digital Asset Treasury Strategy In the first quarter of fiscal 2026, we adopted and approved a digital asset treasury strategy and digital asset treasury policy and the purchase by the Company of Bitcoin and other digital assets in connection therewith (the “Treasury Strategy”). Under the Treasury Strategy, the principal holding in the Company’s treasury reserve on its balance sheet will be allocated to digital assets, principally Bitcoin, by applying a covered-call yield strategy. The Company may use available liquidity, including proceeds from previously disclosed financing arrangements, to purchase Bitcoin and other digital assets, subject to applicable law and public disclosure requirements. The Company intends to solicit the ratification by its shareholders of the engagement by the Company in the Treasury Strategy, as previously disclosed. Exit from Sono Motors GmbH On March 14, 2026, our supervisory board resolved to terminate all current and future funding commitments to the Subsidiary and to exit the legacy solar operations conducted through the Subsidiary, with immediate effect. The Company’s decision was driven by the Subsidiary’s historical lack of profitability, which has resulted in the Company having to continuously provide funding to the Subsidiary, and thus incur losses, and a determination by the supervisory board that there was not a clear path for the Subsidiary to achieve profitability in a reasonably desirable timeframe and thus, avoid future losses by the Company. This decision was made in conjunction with the decision on March 14, 2026 by our management board, with the approval of the supervisory board, to adopt the Treasury Strategy, as previously announced. The Treasury Strategy is projected to generate cash flow for the Company in the first year of its execution. The Company is also exploring other strategic alternatives to maximize shareholder value. The Company is currently unable to make a good faith estimate of the total costs and charges, if any, that may be incurred in connection with the cessation of funding to the Subsidiary and the exit from the Company’s legacy solar business. The determination of any such costs is subject to significant uncertainties, including, among other things, the timing, scope and manner of any actions undertaken with respect to the Subsidiary following the cessation of funding, as well as the extent of any obligations of the Company in connection therewith. Potential costs, if any, may include legal, advisory and other professional fees and expenses associated with activities relating to the Subsidiary. Any such costs and expenditures, if incurred, are expected to be reduced by cash flow to the Company from the Treasury Strategy. 64 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. As a smaller reporting company, we are not required to provide the information required by this Item. Item 8. Financial Statements and Supplementary Data. The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report. An index of those financial statements is found in Item 15. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.