sev20260331_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________

FORM 10-Q

__________________________

(Mark One)

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

For the quarterly period ended March 31, 2026

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

For the transition period from to

Commission File Number 001-41066

__________________________

Sono Group N.V.

(Exact name of registrant as specified in its charter)

__________________________

The Netherlands	98-1828632
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

Sono Group N.V.

4965 Trinidad Drive

Land O’ Lakes, FL 34639

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: +1 352-502-1191

Waldmeisterstraße 93, 80935

Munich, Germany

(Former name, former address and former fiscal year, if changed since last report)

__________________________

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

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Ordinary Shares		SSM		The Nasdaq Stock Market LLC

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

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

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

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of May 15, 2026, there were 1,424,834 ordinary shares, nominal value €0.01 per share, of the registrant outstanding, 40,000 high voting shares, nominal value €0.25 per share, of the registrant outstanding, and 1,401 preferred shares, nominal value €300.00 per share, of the registrant outstanding.

Sono Group N.V.

FORM 10-Q

Table of Contents

		Page
PART I. FINANCIAL INFORMATION		1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025	1
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025	2
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2026 and 2025	3
	Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three Months Ended March 31, 2026 and 2025	4
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28
PART II. OTHER INFORMATION		29
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3.	Defaults Upon Senior Securities	29
Item 4.	Mine Safety Disclosures	29
Item 5.	Other Information	29
Item 6.	Exhibits	30
	Signatures	31

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

SONO GROUP N.V.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

(unaudited)

	March 31, 2026			December 31, 2025
	KUSD			KUSD
ASSETS
Current Assets
Cash		237			243
Digital assets / Bitcoin treasury		4,709			–
Prepaid taxes and VAT receivables		7			121
Prepaid expenses and other current assets		59			138
Assets of discontinued operations classified as held for sale, including right-of-use assets		1,026			1,169
Total Assets		6,038			1,671

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued expenses		1,015			814
Accrued interest payable		44			–
Convertible notes payable, net of discount		699			–
Derivative liabilities — embedded conversion features		3,708			–
Derivative liabilities — written covered Bitcoin call options		21			–
Liabilities of discontinued operations classified as held for sale, including lease liabilities		1,029			983
Total Liabilities		6,516			1,797

Commitments and Contingencies (see Note 14)

Shareholders’ Equity
Preferred Shares, par value €300.00 per share, 1,401 shares authorized, 1,401 and 1,401 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively		456			456
Ordinary Shares, par value €0.01 per share, 120,000,000 shares authorized, 1,424,834 and 1,424,834 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively		14			14
High Voting Shares, par value €0.25 per share, 40,000 shares authorized, 40,000 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively		10			10
Additional paid-in capital		343,504			342,084
Accumulated deficit		(335,405	)		(333,390	)
Accumulated other comprehensive income (loss)		(9,057	)		(9,300	)
Total Shareholders’ Equity		(478	)		(126	)

Total Liabilities and Shareholders’ Equity		6,038			1,671

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

SONO GROUP N.V.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except share and per share amounts)

(unaudited)

	For the three months ended March 31,
	2026			2025
	KUSD			KUSD
Continuing operations
Revenue		–			–
Digital asset treasury loss, net		(313	)		–
General and administrative expenses		(1,167	)		(1,018	)
Loss from continuing operations		(1,480	)		(1,018	)

Other Income (Expenses)
Gain on change in fair value of convertible notes payable carried at fair value		–			10,331
Gain on change in fair value of embedded derivative liabilities		591			–
Interest expense, including amortization of debt discount		(113	)		–
Foreign currency loss, net		–			(13	)
Total other income, net		478			10,318

Income (loss) from continuing operations before income taxes		(1,002	)		9,300
Income tax expense		–			–
Income (loss) from continuing operations		(1,002	)		9,300
Loss from discontinued operations, net of tax		(1,013	)		(1,498	)

Net income / (loss)		(2,015	)		7,802

Net income per share to common shareholders - basic:
Continuing operations	$	(0.68	)	$	6.41
Discontinued operations	$	(0.69	)	$	(1.03	)
Net (loss)/income per share - basic	$	(1.38	)	$	5.38
Net income per share to common shareholders - diluted:
Continuing operations	$	(0.68	)	$	0.90
Discontinued operations	$	(0.69	)	$	(0.15	)
Net (loss)/income per share - diluted	$	(1.38	)	$	0.75

Weighted average number of Ordinary shares outstanding:
Basic		1,464,834			1,449,918
Diluted		1,464,834			10,302,853

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

SONO GROUP N.V.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Amounts in thousands, except share and per share amounts)

(unaudited)

	For the three months ended March 31,
	2026			2025
	KUSD			KUSD
Net income (loss)		(2,015	)		7,802
Other comprehensive income (loss):
Foreign currency translation adjustment		243			1,738
Total other comprehensive income (loss)		243			1,738
Comprehensive income (loss)		(1,772	)		9,540

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 Shares Outstanding		Preferred Shares		Additional Paid in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income / (Loss)		Total Shareholder’s Equity (Deficit)
	(#)		KUSD		(#)		KUSD		(#)		KUSD		KUSD		KUSD						KUSD

Balance at December 31, 2024		1,409,885		30		40,000		22		–		–		322,475		(347,013	)	(1,212	)		(25,698	)

Issuance of Ordinary Shares in connection with December 2024 reverse share split		36		–				–				–		–		–					–
Net income				–				–				–		–		7,802					7,802
Other comprehensive income (loss) / translation adjustment																		1,738			1,738

Balance at March 31, 2025		1,409,921		30		40,000		22		–		–		322,475		(339,211	)	526			(16,158	)

	Ordinary Shares Outstanding		Ordinary Shares		High Voting Shares Outstanding		High Voting Shares		Preferred Shares Outstanding		Preferred Shares		Additional Paid in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income / (Loss)		Total Shareholder’s Equity (Deficit)
	(#)		KUSD		(#)		KUSD		(#)		KUSD		KUSD		KUSD						KUSD

Balance at December 31, 2025		1,424,834		14		40,000		10		1,401		456		342,084		(333,390	)	(9,300	)		(126	)

Issuance of pre-funded warrants / allocated APIC		–		–				–				–		1,420		–					1,420
Net income (loss)				–				–				–		–		(2,015	)				(2,015	)
Other comprehensive income (loss) / translation adjustment				–				–				–		–		–		243			243

Balance at March 31, 2026		1,424,834		14		40,000		10		1,401		456		343,504		(335,405	)	(9,057	)		(478	)

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

SONO GROUP N.V.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

(unaudited)

	For the three months ended March 31, 2026			For the three months ended March 31, 2025
Cash flows from operating activities
Net income (loss)		(2,015	)		7,802
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		9			8
Change in fair value of digital assets		326			—
Net written covered-call derivative income/loss		(14	)		—
Gain on change in fair value of embedded conversion derivative liabilities		(591	)		—
Loss on classification as held for sale / impairment of discontinued operation		519			—
Gain on change in fair value of convertible notes payable carried at fair value		—			(10,331	)
Interest expense, including amortization of debt discount		113			—
Debt discount amortization noncash component		28			—
Foreign currency and other noncash items		275			13
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(190	)		(9	)
Prepaid taxes and VAT receivables		95			(329	)
Accounts payable and accrued liabilities		289			(331	)
Other operating assets and liabilities, including discontinued operations		(200	)		595
Total changes in operating assets and liabilities		(6	)		(74	)
Net cash used in operating activities		(1,356	)		(2,582	)
Cash flows from investing activities
Purchase of digital assets / Bitcoin treasury		(5,000	)		—
Property and equipment / other investing activity of discontinued operations		—			—
Net cash used in investing activities		(5,000	)		—
Cash flows from financing activities
Proceeds from convertible debentures / debt financing		4,350			2,000
Proceeds from pre-funded warrants		2,000			—
Net cash provided by financing activities		6,350			2,000
Effect of exchange-rate changes and held-for-sale cash presentation on cash and cash equivalents		—			(15	)
Net decrease in cash and cash equivalents		(6	)		(597	)
Cash and cash equivalents, beginning of period		243			1,462
Cash and cash equivalents, end of period		237			865
Supplemental disclosure of cash flow information
Cash paid for interest		—			—
Supplemental disclosure of noncash financing and investing activities
Debt discount from derivative bifurcation		4,041			—
Derivative liability initial recognition		5,383			—
Pre-funded warrant APIC allocation		1,420			—
Bitcoin received as written-call premium		35			—

See accompanying Notes to the unaudited Condensed Consolidated Financial Statements.

1. Organization and Description of Business

Sono Group N.V. (“Sono N.V.”) is a public company with limited liability (naamloze vennootschap) incorporated under the laws of the Netherlands. The Company is registered in the business register at the Netherlands Chamber of Commerce (trade register number: 80683568).

In November 2021, the Company completed its initial public offering, and its ordinary shares commenced trading on The Nasdaq Global Market on November 17, 2021 under the ticker symbol “SEV”. 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 of the Company’s ordinary shares from Nasdaq. 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 Nasdaq, and the ordinary shares commenced trading on the Nasdaq Capital Market under the ticker symbol “SSM” on September 5, 2025.

The business address of Sono N.V. as of the date of this Quarterly Report is 4965 Trinidad Drive, Land O’ Lakes, FL 34639, United States of America. As of March 31, 2026, Sono N.V.’s wholly-owned subsidiaries were (i) Sono Motors GmbH, a German limited liability company (Gesellschaft mit beschränkter Haftung) (the “Subsidiary”), registered in the commercial register (Handelsregister) at the local court (Amtsgericht) of Munich, Germany, under HRB 224131, with registered headquarters at Waldmeisterstraße 93, 80935 Munich, Germany, and (ii) 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, which was funded with €12,000 for purposes of providing share capital and had no operations during the three months ended March 31, 2026. As of March 31, 2026, Sono N.V. was the ultimate parent of the Subsidiary and Sono Group S.à r.l. Subsequent to March 31, 2026, Sono N.V. sold the Subsidiary pursuant to a Share Purchase and Transfer Agreement, dated May 4, 2026 (the “SPA”), as a result of which Sono N.V. ceased to be the ultimate parent of the Subsidiary on May 4, 2026. Hereinafter, unless otherwise indicated or the context otherwise requires, the terms “Sono Group”, “Sono”, “the Company”, “we”, “our”, “us” or similar terms, refer to Sono N.V. together with its consolidated subsidiaries as of March 31, 2026.

Sono Group historically intended to develop and manufacture electric vehicles with integrated solar panels (the “Sion passenger car program”) and to license its solar technology to other Original Equipment Manufacturers (“OEMs”). On February 24, 2023, the Company 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 determined to apply for the opening of self-administration proceedings with respect to Sono N.V. and the Subsidiary (the “Self-Administration Proceedings”) on May 15, 2023. The Subsidiary withdrew its application for Preliminary Self-Administration Proceedings on January 31, 2024, and the Subsidiary exited its Self-Administration Proceedings on February 29, 2024. The Company reconsolidated the Subsidiary effective March 1, 2024 following its exit from the Self-Administration Proceedings.

On March 14, 2026, the Company’s 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. On the same date, the Company’s management board, with the approval of the supervisory board, adopted a digital asset treasury strategy (the “Treasury Strategy”). Under the Treasury Strategy, the principal holding in the Company’s treasury reserve on its balance sheet is allocated to digital assets, principally Bitcoin(“Bitcoin” or “BTC”), by applying a covered-call yield strategy. In connection with the Treasury Strategy, on March 10, 2026, the Company entered into a 2002 ISDA Master Agreement, a related Schedule and a Credit Support Annex with Blockchain.com (BVI) II Limited (“Blockchain.com”), facilitating the Company to enter into derivative and/or hedging transactions to manage the risk associated with the Treasury Strategy.

As of March 31, 2026, management concluded that the Subsidiary met the criteria to be classified as held for sale and that the planned disposition (which was completed subsequent to quarter end on May 4, 2026, as further described under Note 16 (Subsequent Events)) represents a strategic shift that has had, or will have, a major effect on the Company’s operations and financial results. Accordingly, the results of operations of the Subsidiary have been presented as discontinued operations, and the related assets and liabilities have been presented as assets and liabilities of discontinued operations classified as held for sale, for all periods presented. Subsequent to March 31, 2026, on May 4, 2026, the Company sold and transferred 100% of the outstanding share capital of the Subsidiary to third-party purchasers. See Note 3 (Liquidity and Going Concern Analysis), Note 4 (Discontinued Operations and Assets and Liabilities Held for Sale), Note 5 (Digital Assets), Note 6 (Written Covered Bitcoin Call Options), Note 8 (Convertible Notes, Embedded Derivatives and Pre-Funded Warrants) and Note 16 (Subsequent Events) for additional information.

These unaudited 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 accounting principles generally accepted in the United States of America (“U.S. GAAP”).

On a consolidated basis, the Company’s operations during the three months ended March 31, 2026 and the three months ended March 31, 2025 are comprised of the parent company, Sono N.V., and the Subsidiary. All significant intercompany transactions and balances have been eliminated upon consolidation. Certain amounts in the prior period unaudited condensed consolidated financial statements have been reclassified to conform to the current period presentation, including the presentation of the Subsidiary as a discontinued operation. In addition, effective January 1, 2026, the Company changed its reporting currency from the euro to the U.S. dollar, and all prior-period financial information presented in these unaudited condensed consolidated financial statements has been recast into U.S. dollars as if the U.S. dollar had been the Company’s reporting currency since the earliest period presented. See Note 2 (Basis of Presentation, Consolidation and Summary of Significant Accounting Policies) for additional information regarding the change in reporting currency.

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 unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and the rules and regulations of the SEC applicable to interim financial information. Accordingly, they do not include all information and footnotes required by U.S. GAAP for annual financial statements and should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary for a fair presentation, consisting of normal recurring adjustments and the non-recurring classification, reporting-currency, fair-value, discontinued-operations and financing-related adjustments described in these notes. Results for the three months ended March 31, 2026 are not necessarily indicative of results for the full fiscal year.

Certain prior-period amounts have been reclassified to conform to the current-period presentation. These reclassifications did not affect total assets, total liabilities, shareholders’ equity, net income (loss) or net decrease in cash and cash equivalents.

Reporting currency and functional currency

Effective January 1, 2026, the Company changed its reporting currency from the euro to the U.S. dollar. Management made the change to better align the Company’s financial reporting with its U.S.-dollar denominated financing activities, U.S. capital-markets reporting environment, and the Treasury Strategy following the Company’s strategic transition. The Company has recast all prior-period financial information presented in these condensed consolidated financial statements into U.S. dollars as if the U.S. dollar had been the Company’s reporting currency since the earliest period presented. The change in reporting currency does not by itself change the underlying functional-currency determination for each distinct and separable operation.

Effective January 1, 2026, Sono Group N.V. determined that its functional currency is the U.S. dollar. As of March 31, 2026, the Subsidiary continues to have the euro as its functional currency. Assets and liabilities of euro-functional operations are translated into U.S. dollars at period-end exchange rates, and revenues, expenses, gains and losses are translated at transaction-date rates or appropriate weighted-average exchange rates. Translation effects are recognized as a component of accumulated other comprehensive income (loss) within shareholders’ equity.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Significant estimates include going concern, held-for-sale and discontinued-operations classification and measurement, fair value measurements of digital assets and derivative liabilities, valuation of convertible notes and related debt discount, lease accounting assumptions, and income tax valuation allowances.

Digital assets and derivative instruments

Digital assets consisting principally of Bitcoin are accounted for under ASC 350-60. The Company’s Bitcoin holdings are initially recognized at cost and subsequently measured at fair value in accordance with ASC 820, with changes in fair value recognized in net income each reporting period. Digital assets are presented as a separate line item in the condensed consolidated balance sheet. The Company does not present digital asset fair-value changes, realized digital asset gains or losses, written-call premiums, derivative settlements or related execution fees as revenue from contracts with customers because such activities do not arise from contracts with customers within the scope of ASC 606.

Written covered Bitcoin call options are accounted for as freestanding derivative liabilities under ASC 815 unless a specific scope exception applies. Premiums received are consideration for assuming a derivative obligation and are not recorded as revenue. Written-call liabilities are measured at fair value at inception and remeasured at fair value each reporting period, with changes recognized in earnings unless hedge accounting is formally designated and documented. The Company has not designated hedge accounting for the arrangements reflected in these condensed consolidated financial statements. The related economics are presented as digital asset treasury income or loss rather than revenue from contracts with customers.

Convertible debt, warrants and fair value measurements

The Company accounts for convertible debentures by recognizing the debt host net of unamortized debt discount and separately recognizing embedded conversion features that require bifurcation as derivative liabilities. Embedded conversion derivative liabilities are measured at fair value at inception and at each reporting date, with changes in fair value recognized in earnings. Debt discount is amortized to interest expense over the expected term of the convertible debentures.

The Company classifies pre-funded warrants in additional paid-in capital when the instruments meet the applicable equity-classification criteria. Cash proceeds from convertible debentures and pre-funded warrants are presented as financing cash inflows in the statement of cash flows, and equity-classified pre-funded warrant amounts are presented within shareholders’ equity.

Fair value measurements are categorized within the fair value hierarchy based on the observability of inputs. Bitcoin is measured using the BTC-USD spot price observed at 23:59:59 UTC on the reporting date from the market in which the Company transacts through Blockchain.com and is classified within Level 1. Written covered Bitcoin call options and embedded conversion derivative liabilities are classified within Level 3 when valuation uses significant unobservable inputs, including volatility, term, conversion or settlement assumptions, and probability-weighted outcomes.

Credit risk and concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, digital assets, collateral arrangements and contractual rights arising from digital asset derivative activity. The Company maintains cash with financial institutions, holds Bitcoin and related rights through digital asset counterparties and custodial arrangements, and monitors counterparty and concentration risk; however, balances may exceed insured or protected limits and are subject to market, custody, liquidity and counterparty risks.

Leases

The Company accounts for leases under ASC 842, Leases. Right-of-use assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Because the Company’s leases generally do not provide an implicit rate, the Company uses its incremental borrowing rate based on information available at commencement. Lease expense is recognized on a straight-line basis over the lease term. The Company has elected the short-term lease recognition exemption for leases with terms of twelve months or less. As of March 31, 2026, the Company’s lease balances, including right-of-use assets, relate to the Subsidiary and are included in discontinued operations and the disposal group classified as held for sale.

Recently Adopted and Recently Issued Pronouncements

Effective January 1, 2025, the Company adopted ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The guidance requires in-scope crypto assets to be measured at fair value, with changes in fair value recognized in net income each reporting period, and requires separate presentation and disclosure of crypto assets. The adoption did not have a material impact on the Company’s consolidated financial statements upon adoption because the Company did not hold material crypto assets at the adoption date. The guidance is applicable to the Company’s Bitcoin holdings acquired in connection with the Company’s digital asset treasury strategy (the “Treasury Strategy”).

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. In January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. The guidance requires additional note disclosures about specified categories of expenses included in certain expense captions. The guidance is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is evaluating the effect of the guidance on its disclosures.

The Company has evaluated other recently issued accounting pronouncements and does not expect them to have a material effect on its condensed consolidated financial statements or related disclosures.

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 twelve months after the date these unaudited condensed consolidated financial statements are issued, in accordance with ASC 205-40. 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 within twelve months after the issuance date of these unaudited condensed consolidated financial statements.

As of March 31, 2026, the Company had cash and cash equivalents of $237 thousand, an accumulated deficit of $335.4 million, $4,709 thousand of Bitcoin measured at fair value, $4,350 thousand of convertible debenture principal outstanding, $1,129 thousand of convertible notes payable, net of discount, and $3,708 thousand of embedded conversion derivative liabilities. For the three months ended March 31, 2026, the Company recognized a loss from operations of $1,480 thousand and a net loss of $2,015 thousand. The Company has incurred recurring operating losses and historically negative cash flows from operations since inception, primarily attributable to the Subsidiary. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

During the three months ended March 31, 2026, management completed financing transactions and strategic actions related to the Company’s transition to the Treasury Strategy and its exit from legacy solar operations. The Company raised aggregate gross proceeds of approximately $6.4 million through the issuance of three secured convertible debentures to Yorkville on January 26, 2026, February 19, 2026 and March 10, 2026, respectively, in the aggregate principal amount of $4.35 million (the “Q1 2026 Debentures”) and the issuance to Yorkville on March 10, 2026 of a pre-funded warrant for aggregate proceeds of $2.0 million. A substantial portion of these proceeds was used to implement the Treasury Strategy, including the acquisition of Bitcoin and the establishment of the Company’s institutional framework with Blockchain.com under the ISDA Master Agreement and the related Schedule and Credit Support Annex. Management also terminated all current and future funding commitments to the Subsidiary and initiated the Company’s exit from the legacy solar operations conducted through the Subsidiary, which is expected to materially reduce the Company’s ongoing cash outflows. In addition, as further described under Note 16 (Subsequent Events), subsequent to March 31, 2026, the Company completed its exit from the legacy solar operations through the execution and consummation of the SPA pursuant to which the Subsidiary was sold on May 4, 2026, and received an additional tranche of funding from Yorkville in the form of a convertible debenture issued by the Company to Yorkville in the aggregate principal amount of $700 thousand. These actions are relevant to management’s liquidity plans but did not alleviate substantial doubt about the Company’s ability to continue as a going concern.

Management considered the financing transactions, implementation of the Treasury Strategy and exit from legacy solar operations in its liquidity analysis. Although these actions may reduce certain cash outflows and provide additional potential liquidity sources, the Company continues to depend on monetization of digital asset holdings, performance of the Treasury Strategy and availability of external financing, and management did not conclude that substantial doubt was alleviated.

The Company’s ability to maintain adequate liquidity remains subject to significant uncertainties, including 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 pursuant to the Credit Support Annex described in Note 5 (Digital Assets) and Note 6 (Written Covered Bitcoin Call Options), and the maturities of the convertible debentures issued during the three months ended March 31, 2026, which mature in 2027 and may require refinancing or conversion prior to or at maturity. Based upon this uncertainty, management has concluded that there is substantial doubt that the Company will continue as a going concern. See Note 16 (Subsequent Events) for additional information regarding subsequent events relevant to the matters described above.

4. Discontinued Operations and Assets and Liabilities Held for Sale

On March 14, 2026, the Company’s 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 was in negotiations to sell the Subsidiary before March 31, 2026, and subsequent to March 31, 2026 executed a share purchase agreement to sell the Subsidiary. Management concluded that the Subsidiary met the criteria to be classified as held for sale as of March 31, 2026 and that the planned disposition (which was completed subsequent to quarter end on May 4, 2026, as further described under Note 16 (Subsequent Events)) represents a strategic shift that has had, or will have, a major effect on the Company’s operations and financial results.

Management’s held-for-sale conclusion was based on the approval of a plan to sell the Subsidiary, management’s commitment to the plan, active negotiations with a buyer, the availability of the disposal group for immediate sale in its then-present condition subject only to customary closing conditions, the expectation that the sale would be completed within one year, and the determination that actions required to complete the plan indicated it was unlikely that significant changes would be made or that the plan would be withdrawn.

The disposal group was measured at the lower of carrying amount or fair value less cost to sell. Based on the planned sale and nominal consideration subsequently documented in the executed SPA, management recognized a $519 thousand loss on classification as held for sale within discontinued operations, net of tax, during the three months ended March 31, 2026. The shareholder loan receivable from the Subsidiary and corresponding payable of the Subsidiary were intra-entity balances and were eliminated in consolidation while the Subsidiary remained consolidated; accordingly, the shareholder loan was not included as a separate consolidated held-for-sale asset or impairment charge. See Note 16 (Subsequent Events) for the SPA terms governing the post-quarter assignment of the shareholder loan claim.

The results of operations of the Subsidiary have been presented as discontinued operations for all periods presented. The related assets and liabilities have been presented separately as held for sale in the unaudited condensed consolidated balance sheets. Parent-company public-company costs, SEC reporting costs, financing costs, digital-asset treasury costs and general holding-company overhead remain in continuing operations unless directly attributable to the discontinued component. The discontinued operation was reported within the Company’s single reportable segment.

As of March 31, 2026 and December 31, 2025, certain lease-related amounts recorded by Sono N.V., including approximately $0.9 million of right-of-use assets at March 31, 2026, relate to lease arrangements associated with the Subsidiary and the legacy solar business. Because the right-of-use assets and related lease liabilities are attributable to the discontinued component, the amounts are included in discontinued operations and in the disposal group classified as held for sale.

Major classes of assets of discontinued operations classified as held for sale (USD in thousands)	March 31, 2026			December 31, 2025
Right-of-use assets		924			673
Other disposal-group assets		621			496
Valuation allowance / impairment recognized on classification as held for sale		(519	)		—
Total assets of discontinued operations classified as held for sale		1,026			1,169

Major classes of liabilities of discontinued operations classified as held for sale (USD in thousands)	March 31, 2026		December 31, 2025
Lease liabilities		652		673
Other disposal-group liabilities		377		310
Total liabilities of discontinued operations classified as held for sale		1,029		983

Major line items included in income (loss) from discontinued operations (USD in thousands)	Three months ended March 31, 2026			Three months ended March 31, 2025
Revenue		174			31
Cost of revenue / cost of sales		(128	)		(24	)
Gross profit		46			7
Selling and distribution expenses		(113	)		(271	)
General and administrative expenses		(242	)		(706	)
Research and development expenses		(258	)		(529	)
Other operating income, net		77			1
Loss from operations of discontinued operations		(490	)		(1,498	)
Foreign currency loss, net		(4	)		—
Loss on classification as held for sale / impairment of disposal group		(519	)		—
Loss from discontinued operations before income taxes		(1,013	)		(1,498	)
Income tax expense		—			—
Loss from discontinued operations, net of tax		(1,013	)		(1,498	)

Discontinued operations cash-flow information (USD in thousands)	Three months ended March 31, 2026		Three months ended March 31, 2025
Net cash provided by (used in) operating activities of discontinued operations		170		(806	)
Effect of exchange-rate changes on cash of discontinued operations		—		(21	)
Net increase (decrease) in cash of discontinued operations		170		(827	)
Cash of discontinued operations, beginning of period		53		1,357
Cash of discontinued operations, end of period		223		530
Depreciation and amortization included in discontinued operations		9		8

Cash and held-for-sale presentation bridge (USD in thousands)	March 31, 2026		December 31, 2025
Cash and cash equivalents presented in continuing current assets		237		243
Cash of discontinued operations included in assets classified as held for sale		223		53
Total cash and cash equivalents including discontinued operations cash		460		296

Upon the May 4, 2026 sale of the Subsidiary and loss of control of the Subsidiary, the Company will deconsolidate the Subsidiary and recognize any resulting gain or loss within discontinued operations in the second quarter of 2026.

5. Digital Assets

During the three months ended March 31, 2026, the Company acquired Bitcoin as part of the Treasury Strategy. The Company’s digital asset holdings consist of Bitcoin and are presented separately on the face of the unaudited condensed consolidated balance sheets. See Note 2 (Basis of Presentation, Consolidation and Summary of Significant Accounting Policies) for the Company’s accounting policies for crypto assets, written covered Bitcoin call options and digital asset treasury income (loss), net, and Note 7 (Fair Value Measurements) for the related fair value measurement disclosures.

The Company’s Bitcoin holdings expose the Company to concentration risk in a single digital asset and to market, custody, counterparty, regulatory, execution and liquidity risks. The fair value of Bitcoin may change materially over short periods, and changes in fair value are recognized in earnings each reporting period. Bitcoin holdings may also be affected by written-call option arrangements, collateral requirements, settlement mechanics and restrictions or practical limitations associated with custody or monetization.

Digital asset rollforward (USD in thousands, except BTC units and USD price per BTC)	BTC units		USD amount
Beginning balance		—		—
Bitcoin purchased / deposited during period		68.49		5,000
Settled BTC premiums received on Q1 written covered calls		0.51		35
Dispositions / physical settlements		—		—
Ending BTC holdings at March 31, 2026		69.01
Period-end BTC price (USD per BTC)		—	$	68,233
Ending Bitcoin fair value (69.01 BTC x $68,233.31; calculated using unrounded BTC units)		69.01		4,709
Cost basis / carrying value before ASC 350-60 fair value remeasurement		69.01		5,035
ASC 350-60 fair value remeasurement gain/(loss)		—		(326	)

BTC units in the table are rounded to the nearest hundredth for presentation. The unit rollforward and ending fair value are calculated using unrounded BTC units from the Company’s Bitcoin treasury valuation support; therefore, rounded displayed unit amounts may not recompute exactly. The settled BTC premium line represents BTC premiums received on written covered calls that expired out of the money before quarter-end.

The digital asset rollforward reflects activity through March 31, 2026 only. The April 3, 2026 Blockchain.com activity report includes post-quarter activity and therefore does not represent the March 31, 2026 BTC-unit balance. The March 31, 2026 balance includes the original 68.49313568 BTC collateral deposit plus 0.51462318 BTC of premiums from written covered Bitcoin calls that expired out of the money by quarter-end.

6. Written Covered Bitcoin Call Options

The Company writes covered Bitcoin call options and receives option premiums. During the three months ended March 31, 2026, the Company received 0.51462318 BTC of premiums on written covered Bitcoin call options that expired out of the money before quarter-end. Written call options are derivative liabilities while outstanding. Premiums received are not revenue from contracts with customers and are recognized through derivative fair-value remeasurement, expiration, close-out or settlement. The written-call strategy may generate premium income but may also limit the Company’s participation in increases in Bitcoin prices and expose the Company to derivative valuation, collateral, counterparty, settlement and liquidity risks.

At March 31, 2026, the Company recognized a $21 thousand derivative liability for the open April 3, 2026 written covered Bitcoin call option. The liability was calculated as 0.31053491 BTC multiplied by the March 31, 2026 BTC-USD spot price of $68,233.31, observed at 23:59:59 UTC on March 31, 2026 from the market in which the Company transacts through Blockchain.com, rounded to the nearest thousand. The fair value of written-call liabilities may increase with increases in Bitcoin spot price, implied volatility or remaining contractual term.

Written covered-call derivative liability rollforward (USD in thousands)	Amount
Initial liabilities recognized for premiums received by period-end		35
Ending written-call derivative liability		21
Realized expiration/settlement gain		35
Open written-call fair-value loss		(21	)
Net written-call income		14

7. Fair Value Measurements

The Company measures Bitcoin and derivative liabilities at fair value in accordance with ASC 820. For directly held Bitcoin, management identified the market in which the Company transacts through Blockchain.com as the principal market for the Company’s Bitcoin treasury transactions. Because Bitcoin trades continuously and does not have a single exchange closing time, the Company measures its period-end Bitcoin position using the BTC-USD spot price observed from that principal market at 23:59:59 UTC on the reporting date. For March 31, 2026, the spot price used was $68,233.31 per BTC. Bitcoin is classified as Level 1 because the valuation uses an observable quoted price in an active market. Written covered-call derivative liabilities and embedded conversion derivative liabilities are classified as Level 3 because valuation includes significant unobservable inputs. The Company had no assets or liabilities measured at fair value on a recurring basis at December 31, 2025. The fair value hierarchy and Level 3 rollforward below present the same March 31, 2026 embedded conversion derivative liability balance as the balance sheet caption for derivative liabilities — embedded conversion features and the convertible debt table in Note 8. (Convertible Notes, Embedded Derivatives and Pre-Funded Warrants).

Fair value hierarchy by instrument (USD in thousands)	March 31, 2026 total fair value		Level 1		Level 2		Level 3
Bitcoin digital assets		4,709		4,709		—		—
Embedded conversion derivative liability		3,708		—		—		3,708
Written covered Bitcoin call derivative liability		21		—		—		21

Level 3 derivative liability rollforward (USD in thousands)	Embedded conversion derivative liability			Written covered Bitcoin call derivative liability
Beginning balance, January 1, 2026		—			—
Initial recognition / issuances		5,383			35
Change in fair value recognized in earnings, net		(1,675	)		21
Settlements / expirations / conversions		—			(35	)
Transfers into or out of Level 3		—			—
Ending balance, March 31, 2026

SEC Form 10-Q filed by Sono Group N.V.