Aptera Motors Corp

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—ORGANIZATION AND BUSINESS

Aptera Motors Corp. (“Aptera” the “Company,” “we,” “us” or “our” and similar terms refers to Aptera Motors Corp. and its subsidiaries unless the context otherwise requires) was incorporated on March 4, 2019 (“Inception”) in the State of Delaware. The Company is developing a solar electric vehicle focused on efficiency. In September 2023, the Company established the subsidiary company Aptera Motors Italia Srl, based in Modena, Italy.

Risks and Uncertainties

Our business is highly sensitive to domestic and global economic and business conditions as well as local, state, and federal government policy decisions. Several factors beyond our control could cause material fluctuations in our business and financial condition. In addition, we require a significant amount of capital to fund vehicle manufacturing, have a limited operating history and operate with small management and development teams that contain key employees. We also face significant barriers to market entry and competing technologies. At times, we have experienced constraints and volatility in our supply chain that resulted in increased costs to us. Furthermore, we are affected by uncertain regulatory conditions, fluctuations in demand, and inflation in production and shipping costs. These conditions could affect the volatility of our business, our financial condition and our results of operations.

Going Concern and Management’s Plans

We have incurred losses from operations since inception and have not generated any revenue to date. We expect to incur significant costs associated with vehicle development, testing, production, and operations before generating revenue. As of September 30, 2025, our existing cash and cash equivalents are not sufficient to fund our current operations for the next twelve months, and as a result, we require significant additional financial resources over the coming year. These factors raise substantial doubt about our ability to continue as a going concern.

Historically, we have funded our operations primarily through the issuance of common stock, including Regulation A+, Regulation CF, and Regulation D offerings.

We have executed several significant financial and corporate milestones, including events subsequent to September 30, 2025, to address our liquidity needs and fund our path to production. These actions include:

Direct Listing Registration Statement: On September 30, 2025, our Registration Statement on Form S-1, filed to register the resale of Class B Common Stock by our existing shareholders, was declared effective by the Securities and Exchange Commission (“SEC”). This registration was a prerequisite for the direct listing of our stock on a national exchange and did not, by itself, raise new capital for the Company.

Equity Line of Credit: On October 13, 2025, we entered into a Share Purchase Agreement with New Circle Principal Investments LLC, providing a committed $75 million equity line of credit. This agreement gives the Company the right, but not the obligation, to sell shares of our Class B Common Stock to New Circle Capital at our discretion, subject to certain terms, conditions, and limitations. The Company filed a registration statement on October 23, 2025 to register 6,000,000 shares issuable under this agreement.

Nasdaq Direct Listing: On October 16, 2025, our Class B Common Stock commenced trading on the Nasdaq Capital Market under the ticker symbol “SEV”. This listing provides us with access to the public capital markets for future financing needs, including the aforementioned equity line.

The Company’s ability to continue as a going concern for the next twelve months is dependent on its ability to obtain sufficient funding by accessing capital under the $75 million equity line of credit and, as needed, raising additional funds through the public markets.

While management believes the equity line of credit and access to the public markets will provide the necessary liquidity, there is no guarantee that we will be able to draw down the full amount of the equity line or secure additional financing on favorable terms, or at all.

If we are unable to obtain adequate financing through these means, we may be required to implement significant cost-cutting measures, reduce investments in product development, or significantly curtail our operations. These actions would have a material adverse effect on our business, financial condition, and results of operations. The accompanying condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

NOTE 2 –BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading.

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2024 included in Form S-1 recently filed with the SEC. Interim results are not necessarily indicative of the results expected for the full year.

The Company operates as a single reportable segment focused on the development of solar electric vehicles. The Co-Chief Executive Officers review consolidated financial information to assess performance and allocate resources.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of expenses during the reporting periods. We use historical and other pertinent information to determine those estimates. Actual results could materially differ from these estimates.

Reverse Stock Split

The accompanying condensed consolidated financial statements and related notes have been retroactively restated to reflect a 1-for-3 reverse stock split of the Company’s common stock effected on August 5, 2025.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants as of the measurement date. Applicable accounting guidance provides an established hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors that market participants would use in valuing the asset or liability. There are three levels of inputs that may be used to measure fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2—Observable inputs other than prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated with observable market data.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies, and similar techniques that use significant unobservable inputs.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Fair-value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of the balance sheet dates.

The following are the classes of assets and liabilities measured at fair value:

As of September 30, 2025 and December 31, 2024, the respective carrying value of cash and cash equivalents, receivables, other current assets, accounts payable, unearned reservation fees and short-term debt approximated their fair values.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. As of September 30, 2025 and December 31, 2024, cash and cash equivalents contained $4.1 million of unearned refundable customer reservation fees.

Grant Funds Receivable

The Company receives matching grant funds from the California Energy Commission for research and development activities. These matching grant funds are non-refundable and are subject to certain conditions and milestones.

The Company accounts for these grants under the reimbursement method. This means that grant funds are recognized as receivables only after the Company has incurred the qualifying R&D expenses and has submitted a request for reimbursement to the granting agency.

The Company assesses the probability of receiving reimbursement based on its ongoing communication with the granting agency and its compliance with the grant terms. If any conditions for grant eligibility are not met, the Company may be required to repay a proportionate amount of the grant received.

Grants received are recorded as other income in the condensed consolidated statements of operations. See Note 3 for additional information.

Property and Equipment

Property and equipment are recorded at cost. Depreciation is computed using the straight-line method over the following estimated useful lives:

Long-Lived Assets

Long-lived assets, such as property, plant and equipment and operating lease assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for potential impairment, we first compare undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent the carrying amount of the underlying asset exceeds its fair value.

For the nine months ended September 30, 2025 and 2024, we recordedno impairment charges on long-lived assets.

Unearned Reservation Fees

Unearned reservation fee liabilities are recorded based on all funds we expect to collect on each transaction, including merchant processor fees charged. We maintain a separate money market account for all customer reservation fees collected.

Leases

The Company recognizes all operating leases on the condensed consolidated balance sheets at the commencement date. This includes:

Lease expense is recognized on a straight-line basis over the lease term, reflecting the benefit of using the leased asset. Our assessed lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

We recognize a ROU asset at the commencement of an operating lease, representing the right to use the leased asset. The ROU asset is initially measured at the present value of the non-cancellable lease payments, including any initial direct payments. The ROU asset is depreciated over the lease term, using the same depreciation method and useful life as the underlying leased asset, or if not readily determinable, using a straight-line method over the lease term.

We recognize a lease liability at the commencement of an operating lease, representing the obligation to make lease payments. The lease liability is initially measured at the present value of the non-cancellable lease payments, less any initial direct payments. The lease liability is subsequently remeasured to reflect the present value of the remaining lease payments using the lessee’s incremental borrowing rate at the initial recognition date or the subsequent remeasurement date, if applicable. Interest expense is recognized on the lease liability using the effective interest method.

Commitments and Contingencies

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount within a range of loss can be reasonably estimated. When no amount within the range is a better estimate than any other amount, we accrue for the minimum amount within the range. Legal costs incurred in connection with loss contingencies are expensed as incurred.

We regularly enter into purchase obligations with vendors and service providers, which represent expected payments and commitments during the normal course of our business. These purchase obligations are generally cancellable with or without notice and without penalty, although certain vendor agreements provide for cancellation fees or penalties. As of September 30, 2025 and December 31, 2024, we had approximately $4.0 million and $9.0 million in open purchase orders, respectively.

Revenue Recognition

To date, the Company has not generated any revenue from operations. The Company is currently in the pre-production development, testing and validation stage.

The Company expects to recognize revenue upon the delivery of its product to customers.

The Company’s ability to generate revenue is subject to various risks and uncertainties, including successful product development, market acceptance and regulatory approvals. These factors could materially impact the timing and amount of future revenue recognized by the Company.

Key Considerations for Future Revenue Recognition:

The Company will continue to evaluate its revenue recognition policies and procedures as its business evolves and will make any necessary disclosures in future financial statements.

Income Taxes

Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities.

Tax benefits from uncertain positions are recognized only if it is “more likely than not” that the position is sustainable upon examination by the relevant taxing authority based on its technical merit.

We are subject to tax in the United States (“U.S.”) and internationally and we file tax returns in the U.S. Federal jurisdiction, California state jurisdiction and Italy. We are subject to U.S. Federal, state and local income tax examinations by tax authorities for all periods since Inception.

Stock-Based Compensation

We account for stock-based compensation at the grant date, based on the calculated fair value of the award using the Black-Scholes Option Pricing Model. For time-based awards, stock-based compensation expense is recorded using the straight-line method over the employee’s requisite service period (generally the vesting period of the equity grant).

The Company accounts for forfeitures as they occur. Accordingly, compensation expense is recognized only for awards that ultimately vest. Forfeitures are recognized in the period in which they occur, and no estimations or adjustments are made for anticipated forfeitures.

Stock options issued to non-employees are accounted for at their calculated fair value of the award.

Research and Development

Research and development costs are expensed as incurred and represent costs incurred to further new technologies, product design and technical capabilities.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentration of credit risk are cash, cash equivalents, and restricted cash. We hold cash in domestic financial institutions that are federally insured within statutory limits. At times, deposits exceed federally insured limits.

Concentration of Supply Risk

The Company is dependent on a few suppliers for capital equipment, the majority of which are single-source suppliers, and the inability of these suppliers to deliver necessary equipment and components of its products according to the schedule and at prices, quality levels and volumes acceptable to the Company, or its inability to efficiently manage these components, could have a material adverse effect on the Company’s results of operations and financial condition.

Loss Per Share

We compute net loss per share of Class A and Class B Common Stock using the two-class method. Basic net loss per share is computed using the weighted-average number of shares outstanding during the period. Diluted net loss per share is computed using the weighted-average number of shares and the effect of potentially dilutive securities outstanding during the period. For periods in which we incur a net loss, the effects of potentially dilutive securities would be antidilutive and would be excluded from diluted calculations. Dilutive securities consist of Preferred Stock, warrants and options under the Company’s 2021 Stock Option and Incentive Plan.

As of September 30, 2025 and 2024, potentially dilutive securities outstanding were as follows:

For the three and nine months ended September 30, 2025 and 2024, we incurred a net loss for which the effects of our potentially dilutive securities would be antidilutive and are therefore excluded from diluted net loss per share calculations.

The following table sets forth the computation of basic net loss per share of Class A and Class B stock (in thousands, except per share amounts):

Recent Accounting Pronouncements

In November 2024, the Financial Accounting Standards Board issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The update requires public business entities to disclose, in tabular form, the natural expense components (such as employee compensation, depreciation, amortization, and inventory purchases) that comprise relevant income-statement captions including cost of sales, selling, general and administrative, and research and development expenses.

The guidance does not change recognition or measurement but is intended to enhance transparency of expense classification. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted.

The Company, as a public business entity, will adopt the standard on January 1, 2027, and currently does not expect adoption to have a material impact on its consolidated financial statements other than expanded disclosure requirements.

NOTE 3 –GRANT FUNDS RECEIVABLE

On February 15, 2023, we were awarded a $21.9 million grant from the California Energy Commission (“CEC”), which provides for the reimbursement of certain capital investments and operating costs related to battery and solar and production applications for our vehicle, subject to milestone achievements. Reimbursement requests made by us are recorded as grant funds receivable and other income, net of a 10% retention amount, which CEC holds until there is evidence of project completion. The project and grant reimbursement period concludes in the first quarter of 2027. Completion of the project requires us to meet significant milestones in the future, the probability of which is uncertain, particularly as milestone schedules are subject to ongoing discussion and revision based on the timing of required capital funding.

Through September 30, 2025, the Company had submitted reimbursement requests totaling approximately $10.0 million under this grant. Of this amount, approximately $7.3 million had been received in payments, and $0.7 million was retained by the CEC. The remaining $2.7 million was recognized as Grant Funds Receivable on the condensed consolidated balance sheet. This $2.0 million receivable was subsequently collected in October 2025. None of the retention amount has been recognized as other income.

NOTE 4 –COMMITMENTS AND CONTINGENCIES

Technology License Agreement

The Company has a Technology License Agreement (“TLA”) with Chery Automobile Co. Ltd. (“Chery”), as amended in 2023, granting the Company a non-transferable license to use certain Chery automobile parts technology, know-how, and data.

Under the amended TLA, the cash consideration component has been fully satisfied. The agreement includes a remaining contingent obligation for the Company to issue up to $5.0 million in shares of Class B Common Stock to Chery. This obligation is triggered in installments upon the Company entering into specific parts supply agreements with Chery and receiving the initial batches of parts under those agreements. The timing and ultimate issuance of these shares are dependent on the Company proceeding with these specific purchasing milestones. The Company also holds certain rights of first refusal regarding the shares held by Chery.

Litigation and Regulation

Various aspects of our business and service areas are subject to U.S. federal, state, and local regulation, as well as regulation outside the United States. The Company is also subject to legal proceedings which arise in the ordinary course of business.

In August 2024*, Zaptera USA, Inc.* (“Zaptera”) filed a complaint against Aptera Motors Corp. in U.S. District Court for the Southern District of California. Following amendments and motions to dismiss, Zaptera presently asserts claims against Aptera Motors Corp. and certain associated individuals for design patent infringement, misappropriation of trade secrets, and declaratory judgment of patent ownership. It also asserts breach of contract claims against the individuals, but not the Company itself. Zaptera seeks various remedies, including damages and injunctive relief.

On October 10, 2025, Aptera Motors Corp. and the individual defendants filed their answers and affirmative defenses to Zaptera’s amended complaint. Aptera Motors Corp. intends to vigorously defend this litigation and continues to believe the claims are without merit. However, litigation is inherently uncertain, and an unfavorable outcome could materially harm our business.

In January 2025, we received a subpoena for documents from the staff of the Securities and Exchange Commission (SEC) related to our securities offerings and the production, design, and manufacture of our vehicles. This subpoena is part of an ongoing SEC investigation. The Company continues to cooperate fully with the investigation and is continuing to produce documents in response to the subpoena and subsequent requests.

The SEC has informed us that the investigation does not mean that it has concluded that anyone has violated the law and that the receipt of the subpoena does not mean that the SEC has a negative opinion of any person, entity, or security. However, the Company can offer no assurances as to the timing, outcome or potential effect, if any, of this ongoing investigation. Responding to the subpoena and related requests continues to require the dedication of management time and attention and has resulted, and may continue to result, in the incurrence of significant expenses, including legal and other professional services fees.

NOTE 5 –LEASES

As of September 30, 2025, we leased approximately 77,000 square feet of office, manufacturing and assembly space at our principal facility in Carlsbad, California. We record leases at lease commencement, which is the date when the underlying asset is made available for use by the lessor.

The lease commenced on February 1, 2022, and has a term of 62 months, expiring on April 1, 2027.

The lease agreement includes scheduled rent escalations over the lease term, with monthly base rent ranging from $91,000 to $106,000. The lease also included rent abatement for the second and thirteenth months of the lease. Lease expense is recognized on a straight-line basis over the lease term.

The Company has two options to extend the lease term for 60 months each, subject to the terms of the lease. A security deposit of $2.5 million was paid in connection with the lease, $1.5 million of which has been returned to the Company as of September 30, 2025. The lease is a triple net lease, meaning the Company is responsible for all costs, expenses, and obligations relating to the facility, including operating expenses, repairs, insurance, and taxes.

Our lease agreement does not provide an implicit borrowing rate and we have, therefore, used a benchmark approach to derive an appropriate incremental borrowing rate. We used companies of similar credit ratings and comparable credit quality to derive a benchmark incremental borrowing rate to discount lease liabilities through the remaining lease term.

Operating lease obligations are presented as follows on the condensed consolidated balance sheets (in thousands):

We recorded $0.8 million as operating lease expense for the nine months ended September 30, 2025 and 2024, respectively. This expense is allocated to “General, selling, and administrative” and “Research and development” expenses in the condensed consolidated statements of operations.

Other information related to our lease obligations is as follows:

NOTE 6 –STOCKHOLDERS’ EQUITY

Preferred Stock

As of the beginning of the reporting period, the Company was authorized to issue up to 31,304,495 shares of preferred stock, of which 11,304,495 had been designated as Series B-1 Preferred Stock. In addition,20,000,000 shares of preferred stock were authorized for issuance from time to time in one or more series by resolution of the Board of Directors.

Holders of then-outstanding Series B-1 Preferred Stock were entitled to certain preferences in the event of a liquidation of the Company’s assets, including priority distributions of funds and declared but unpaid dividends. They also held preferential dividend rights, whereby the Company could not declare or pay dividends on common stock in amounts greater than those available to Series B-1 Preferred shareholders, unless such dividends on common stock were payable in common stock.

In July 2025, the holders of Series B-1 Preferred Stock approved an amendment to the automatic conversion provisions, allowing conversion upon the earlier of (i) a Qualified Public Company Event, as defined in the Company’s certificate of incorporation, or (ii) another date or event approved by the holders of a majority of the then-outstanding Series B-1 Preferred Stock.

On September 30, 2025, the Company’s registration statement on Form S-1 relating to its Class B Common Stock became effective with the U.S. Securities and Exchange Commission. As a result, all 3,721,394 outstanding shares of Series B-1 Preferred Stock automatically converted into Class B Common Stock on a one-for-one basis on September 30, 2025.

As of September 30, 2025, no shares of preferred stock remained issued or outstanding.

Class A Common Stock

Holders of Class A common stock are entitled to one vote per share on all matters submitted to a vote of stockholders. Class A common stockholders also have the right to receive dividends when and if declared by the Board of Directors, as well as to participate in any distributions of assets in the event of liquidation, subject to the rights of any preferred stock that may be outstanding.

Each share of Class A common stock is convertible, at the option of the holder, into one share of non-voting Class B Common Stock at any time. Such conversion is on a one-for-one basis and is not subject to any additional consideration, subject only to equitable adjustments for stock splits, stock dividends, or similar events.

During September 2025, certain holders voluntarily converted an aggregate of 395,873 shares of Class A common stock into an equal number of shares of Class B Common Stock pursuant to these terms. Conversions occurring after September 30, 2025 are described in Note 8 - Subsequent Events.

Class B Common Stock

Holders of Class B Common Stock are not entitled to voting rights, except as required by applicable law. They have the right to receive dividends when and if declared by the Board of Directors, as well as to participate in any distributions of assets in the event of liquidation on an equal basis with holders of Class A common stock, subject to the rights of any preferred stock that may be outstanding.

As previously disclosed, the Company issued to a vendor a warrant to purchase 333,333 shares of Class B Common Stock at an exercise price of $31.50 per share. This warrant vested in full on May 15, 2025, and expires on November 15, 2034. During the nine months ended September 31, 2025,250,000 of these warrant shares vested in accordance with the service-based vesting schedule. As a result, the Company recognized stock-based compensation expense of $7.3 million, which was recorded in selling, general and administrative expenses.

Stock Issuance Costs

Stock issuance costs consist of commissions paid to administrative and technology service providers and fees paid to electronic investor platforms to facilitate transactions for our regulation crowd-funding offerings.

NOTE 7 –STOCK-BASED COMPENSATION

Stock Option and Incentive Plan

In June 2021, our Board approved and we adopted the 2021 Stock Option and Incentive Plan (the “2021 Plan”). The 2021 Plan allows us and any future subsidiaries to grant incentive and non-statutory stock options, and restricted stock awards to our employees, non-employee directors and consultants. The primary purpose of the 2021 Plan was to enable us to attract, retain and motivate our employees, non-employee directors and consultants.

The 2021 Plan was administered by a Committee as defined in the 2021 Plan. The maximum aggregate number of common stock shares that may be granted under the Plan was 6,333,333. The Committee had full discretion to set the vesting criteria. The exercise price of stock options granted may not be less than 100% of the fair market value of our common stock on the date of grant. The Plan prohibited the repricing of outstanding stock options without prior shareholder approval. The term of stock options granted under the Plan may not exceedten years. The Board may amend, alter, or discontinue the Plan, but shall obtain shareholder approval of any amendment as required by applicable law.

The number of shares of common stock that remain available for issuance under the Plan was 1,940,148 as of September 30, 2025. On October 16, 2025, the 2021 Plan was terminated, provided, that all awards outstanding under the 2021 Plan shall continue in effect in accordance with their terms.

Outstanding stock options generally expire 10 years from the date of grant and are exercisable when the options vest. Stock options generally vest over four years, one-quarter of such shares vesting on each year anniversary of the vesting commencement date. A summary of stock option activity is as follows (aggregate intrinsic values in thousands):

The total fair value of stock options granted during the nine months ended September 30, 2025 and 2024, respectively was $28.3 million and $9.1 million, respectively, which is being recognized over their respective vesting periods.

We estimate the fair value of the options utilizing the Black-Scholes option pricing model, which is dependent upon several variables, including expected option term, expected volatility of our share price over the expected term, expected risk-free interest and underlying estimated fair value of stock price.

Expected Option Term: The expected option term represents the period that options granted are expected to be outstanding. Given the limited historical exercise data of our stock options, we utilize the simplified method, to estimate the expected term. This method calculates the expected term as the midpoint between the vesting period and the contractual term of the options.

Expected Volatility: The expected volatility is a measure of the amount by which our share price is anticipated to fluctuate during the expected term of the options. We determine expected volatility based on the historical volatility of comparable publicly traded companies within our industry. These comparable companies were selected based on factors such as industry similarity, market capitalization, and stage of development. The historical volatility is calculated over a period consistent with the expected term of the options.

Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date for periods corresponding to the expected term of the options.

Dividend Yield: The Company has not historically paid dividends and does not anticipate paying dividends in the foreseeable future. Therefore, the dividend yield is assumed to be zero.

These assumptions are evaluated and adjusted as necessary based on changes in market conditions and historical experience.

Modification of Option Grants

During the nine months ended September 30, 2025 and 2024, the Company modified the post-termination exercise period for stock option awards granted to certain former employees, executives, and board members. Specifically, the modifications extended the period during which these individuals may exercise their options after leaving the Company. These changes resulted in incremental stock-based compensation expense of $0.5 million and $5.5 million for the nine months ended September 30, 2025 and 2024, respectively.

The allocation of stock-based compensation expense was as follows (in thousands):

As of September 30, 2025 the total unrecognized compensation cost related to outstanding time-based options was $26.1 million, which is expected to be recognized over a weighted-average period of 1.55 years.

NOTE 8 –SUBSEQUENT EVENTS

The Company evaluated subsequent events from the balance sheet date of September 30, 2025, through November 14, 2025, the date these condensed consolidated financial statements were issued. Material events include:

Equity Line of Credit (ELOC)

On October 13, 2025, the Company entered into a Share Purchase Agreement with New Circle Principal Investments LLC (“Investor”), providing access to up to $75.0 million in capital over 36 months. Key terms include:

Direct Listing on Nasdaq

On October 16, 2025, the Company’s Class B Common Stock commenced trading on the Nasdaq Capital Market under the ticker symbol “SEV”. The Company did not receive any proceeds from the direct listing, as it was a resale of shares by existing stockholders.

Transition to Public Benefit Corporation

On September 30, 2025, the Company filed an amended and restated certificate of incorporation and transitioned to a Delaware Public Benefit Corporation (“PBC”). As a PBC, the Company is required to balance the pecuniary interests of its stockholders, the best interests of those materially affected by its conduct, and the specific public benefit it has chosen to pursue.

Conversion of Class A to Class B

In October 2025, certain holders of the Company’s Class A common stock voluntarily converted an aggregate of 733,009 shares of Class A common stock into an equal number of shares of Class B Common Stock, pursuant to the terms of the Company’s certificate of incorporation. None of these conversions involved holders representing greater than 5% of the Company’s outstanding shares or otherwise resulted in any change of control.

2025 Omnibus Equity Incentive Plan

On October 23, 2025, the Company filed a registration statement on Form S-8 with the U.S. Securities and Exchange Commission to register 14,000,000 shares of Class B Common Stock issuable under the Company’s 2025 Omnibus Equity Incentive Plan (the “2025 Plan”).

The 2025 Plan, which was approved by the Board and adopted by the stockholders in August 2025 and became effective in connection with the Company’s Direct Listing on Nasdaq, replaced the 2021 Plan. No further awards will be made under the 2021 Plan, although all outstanding awards under the 2021 Plan will continue to vest and convert as originally granted.

Restricted Stock Units

In connection with the Company’s direct listing on Nasdaq, the Company granted 143,987 restricted stock units (RSUs) to directors whose service commenced upon the listing . The RSUs were valued at $6.98 per share, based on the average of the daily Volume Weighted Average Price (VWAP) of the Company’s Class B Common Stock over the first five consecutive trading days beginning with October 16, 2025, in accordance with the terms of the directors’ offer letters.

Once granted, 29,373 of the units are scheduled to vest immediately, and the remaining 114,614 units are scheduled to vest in four equal 25% annual installments, subject to continued service.

Warrants

During the year ended December 31, 2024, the Company issued warrants to service providers for 533,333 shares of Class B Common Stock. As stipulated in the agreement, the exercise price was to be determined based on a 5-day measurement period following the Company’s listing on a national exchange. The Company listed on October 16, 2025, and accordingly, on October 22, 2025, the exercise price for these warrants was set at $5.28 per share.