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Note 9 - Convertible Notes Payable at Fair Value | 12 Months Ended
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Dec. 31, 2024
Notes to Financial Statements |
Debt Disclosure [Text Block] | NOTE 9 – CONVERTIBLE NOTES PAYABLE AT FAIR VALUE As of December 31, 2024 and 2023, the estimated fair value of our convertible debt is as follows:
|  | 2024 KEUR |  |  | 2023 KEUR |
Face value $27,656 convertible notes due December 7, 2023 (in default) |  |  | 24,035 |  |  |  | 25,629 |
On December 7, 2022, the Company entered into a share purchase agreement with Yorkville to purchase up to $31.1 million in convertible debentures (the “ 2022 Debentures”). On February 5, 2024 and August 30, 2024, Company issued additional convertible debentures in the amounts of $4.3 million and $3.3 million, respectively, (the “February 2024 Debenture” and "August 2024 Debenture” respectively, and together, the “2024 Debentures”), pursuant to a funding commitment letter entered into between the Company and Yorkville in connection with Sono Group’s restructuring in connection with the Self-Administration Proceedings. The following table reflects the outstanding debt and accrued interest for each tranche as of December 31, 2024 and December 31, 2023:
December 31, 2024 | Issue Date |  | Principal KUSD |  |  | Accrued Interest KUSD |
Tranch-1 @4% (12% - default rate) | December 7, 2022 |  |  | 11,100 |  |  |  | 2,370 |
Tranch-2 @4% (12% - default rate) | December 8, 2022 |  |  | 8,150 |  |  |  | 1,657 |
Tranch-3 @4% (12% - default rate) | December 20, 2022 |  |  | 750 |  |  |  | 153 |
Tranch-4 @12% (18% - default rate) | February 5, 2024 |  |  | 4,318 |  |  |  | 470 |
Tranch-5 @12% (18% - default rate) | August 30, 2024 |  |  | 3,338 |  |  |  | 136 |
Total |  |  | 27,656 |  |  |  | 4,785 |
December 31, 2023 | Issue Date |  | Principal KUSD |  |  | Accrued Interest KUSD |
Tranch-1 @4% (12% - default rate) | December 7, 2022 |  |  | 11,100 |  |  |  | 1,034 |
Tranch-2 @4% (12% - default rate) | December 8, 2022 |  |  | 8,150 |  |  |  | 676 |
Tranch-3 @4% (12% - default rate) | December 20, 2022 |  |  | 750 |  |  |  | 62 |
Total |  |  | 20,000 |  |  |  | 1,772 |
The 2022 Debentures carry a coupon of 4% and were convertible into common stock at the holder’s option at, the lower of (i) $1.75, or (ii) 96.5% of the lowest daily VWAP of the Ordinary Shares during the (7) consecutive Trading Days immediately preceding the conversion date or other date of determination). As a result of the amendment described below, the 2022 Debentures have a maturity date of the later of July 1, 2025 or 12 months from the issuance date of each such new note. The 2022 Debentures contain default provisions that accelerate the payment of principal and interest calculated at the default rate of 12%. Resulting from the Company’s application for its Self-Administration Proceedings, the 2022 Debentures have been in default since May 15, 2025. In November 2023, the contractual terms of the 2022 Debentures were renegotiated and significantly amended resulting in modified convertible debentures. The maturity date was extended until July 1, 2025. The conversion price was changed to the lower of USD 0.25 and 85% of the minimum daily volume-weighted average price on the seven trading days before conversion, provided that the conversion price will not be below the nominal value of EUR 0.06, as translated to USD, and, if and only if the shares of Sono Group are listed and traded on Nasdaq on the relevant conversion date, the conversion price will not be lower than the Floor Price of USD 0.006. The 2024 Debentures carry a coupon of 12% and are convertible into common stock at the holder’s option at, the lower of (x) a price per Ordinary Share equal to $18.75 or (y) 85% of the lowest daily volume weighted average price of the Ordinary Shares during the seven consecutive trading days immediately preceding the date of conversion (the “2024 Variable Conversion Price”); provided, that the 2024 Variable Conversion Price may not be lower than (i) a price equal to 20% of the closing price of the ordinary shares on the trading day immediately prior to the issuance date of the debenture and (ii) the nominal value of one ordinary share. The 2024 Debentures contain default provisions that accelerate the payment of principal and interest calculated at the default rate of 18%. The February 2024 Debenture has a maturity date of July 1, 2025, and the August 2024 Debenture has a maturity date of August 30, 2025. The Company has evaluated the terms and conditions of the convertible notes under the guidance of ASC 815. The conversion feature did not meet the definition of “indexed to a company’s own stock” provided for in ASC 815 due to the variable number of shares issuable at conversion. Therefore, the conversion feature requires bifurcation and liability classification. Rather than bifurcating and recording the embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. The carrying value of the convertible notes, which under ASC 815-15-25-4 is Fair Value, is on the balance sheet, with changes in the carrying value being recorded in earnings. The components of the convertible promissory notes as of December 31, 2024 and 2023 are as follows:
|  | 2024 |  |  | 2023 |
Indexed common shares |  |  | 18,537,485 |  |  |  | 12,441,365 |
Fair value per share |  | $ | 1.24 |  |  | $ | 1.86 |
Total Fair Value of Convertible Notes |  | EUR24,035 |  |  | EUR25,629 |
The Company utilized a binomial lattice option pricing model to estimate the fair value per share of the underlying common equity. The Company believes that the binomial lattice model results in the best estimate of fair value because it embodies all of the requisite assumptions (including the underlying price, exercise price, term, volatility, and risk-free interest-rate) necessary to fairly value these instruments and, unlike less sophisticated models like the Black-Scholes model, it also accommodates assumptions regarding investor exercise behavior and other market conditions that market participants would likely consider in negotiating the transfer of such an instruments. The table below reflects the assumptions used as inputs to the binomial lattice option pricing model.
Assumption |  | December 31, 2024 |  |  | December 31, 2023 |
Closing price of underlying common equity |  | $ | 4.18 |  |  | $ | 5.92 |
Exercise price |  | $ | 1.75 |  |  | $ | 1.64 |
Volatility of underlying common equity |  |  | 150 | % |  |  | 150 | %
Remaining term (in years) |  | 1 |  |  | 1 |
Risk Free treasury rates |  |  | 4.18 | % |  |  | 4.20 | %
Foreign exchange rate at year end USD/EUR |  |  | 1.0389 |  |  |  | 1.105 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 815 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 8A -Publisher FASB -URI https://asc.fasb.org/1943274/2147480434/815-10-50-8A Reference 2: http://www.xbrl.org/2003/role/disclosureRef 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