3. Liquidity and Going Concern Analysis

The Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period, including interim periods. In evaluating the Company’s ability to continue as a going concern, management considered the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within 12 months after these consolidated condensed financial statements are issued. Management considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows and the Company’s obligations due before November 30, 2026.

The Company is subject to a number of risks, including uncertainty related to product development and generation of revenues and positive cash flow from its Sono Motors GmbH division and a dependence on outside sources of capital. The attainment of profitable operations is dependent on future events, including obtaining adequate financing to fulfill the Company’s growth and operating activities and generating a level of revenues adequate to support the Company’s cost structure.

As of September 30, 2025, the Company had cash balances of EUR2.3 million, a working capital surplus of EUR2.2 million and an accumulated deficit of EUR314.8 million. For the nine months ended September 30, 2025, the Company had net income of EUR6.6 million. For the nine months ended September 30, 2025, the Company recorded an operating loss of EUR5.2 million, had net cash used in operating activities of EUR5.2 and expects to continue to incur small operating losses and have net cash outflows for at least the next 12 months, offset by cash flows from financing and other business activities. Following certain amendments to our agreements with YA II PN, Ltd. (“Yorkville”) as previously disclosed by the Company, on September 5, 2025 the Company’s ordinary shares commenced trading on the Nasdaq Capital Market under the ticker symbol “SSM.” In connection with such uplisting, the aggregate principal amount available under the Yorkville debenture was increased to $7.2 million, including an immediate advance of approximately $3.41 million on September 5, 2025, and the previously funded smaller advances in 2025 under earlier omnibus amendments constituted the remaining balance; accordingly, no additional amounts remain available to be drawn under the Yorkville debenture.                                   

Management has evaluated the significance of the conditions described above in relation to the Company’s ability to meet its obligations and concluded that, in light of the Company’s current cash on hand and working capital position together with the Company’s contemplated additional fundraising efforts, cost-reduction measures and commercial development efforts, if consummated as planned and on acceptable terms which cannot be guaranteed, the Company would have sufficient liquidity to meet its obligations within one year from the date of these consolidated financial statements. However, the availability, timing, and terms of any such additional measures, including financing efforts, cannot be assured. Accordingly Management has concluded that substantial doubt exists about the Company’s ability to continue as a going concern.