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STOCKHOLDERS’ EQUITY
 12 Months Ended
Dec. 31, 2025
Equity [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 7 – STOCKHOLDERS’ EQUITY

 

Transition to Public Benefit Corporation and Direct Listing

 

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. 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.

 

Preferred Stock

 

During the year ended December 31, 2025, in connection with its direct listing, the Company reduced the number of authorized preferred stock to 20,000,000 from 31,304,495 as of December 31, 2024.

 

In July 2025, the holders of 3,721,394 shares of Series B-1 Preferred Stock, representing all outstanding shares, 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 December 31, 2025, no shares of preferred stock remained issued or outstanding. Prior to the conversion on September 30, 2025, 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.

 

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 the year ended December 31, 2025, certain holders voluntarily converted an aggregate of 6,220,894 shares of Class A common stock into an equal number of shares of Class B Common Stock pursuant to these terms, which included 733,009 shares converted in October 2025 following the direct listing.

 

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.

 

Equity Line of Credit (ELOC)

 

On October 13, 2025, the Company entered into a Share Purchase Agreement with New Circle Principal Investments LLC (the “Investor”), providing the Company with access to up to $75.0 million in capital over a 36-month period. Under the terms of the agreement, the Company has the right, but not the obligation, to sell shares of its Class B Common Stock to the Investor at its discretion. The purchase price for the shares is based on the Volume Weighted Average Price (VWAP) during a specified pricing period, less a negotiated discount (3% for a 3-day VWAP or 4% for a 1-day VWAP).

 

 

Total shares of Class B Common Stock issuable under the ELOC are limited to 19.99% of the shares outstanding as of October 13, 2025, unless stockholder approval is obtained or not required under applicable Nasdaq rules. Furthermore, the Investor cannot beneficially own more than 4.99% (or 9.99% upon notice) of the Company’s outstanding shares of Class B Common Stock at any given time. Accessing the facility requires an effective resale registration statement, which the Company filed on Form S-1 on October 23, 2025, to initially register 6,000,000 shares for this purpose.

 

Common Stock Warrants

 

During the year ended December 31, 2024, the Company issued an aggregate of 866,666 warrants to purchase Class B Common Stock to a single service provider in two distinct tranches. The first tranche consisted of 333,333 warrants issued with a fixed exercise price of $31.50 per share. These warrants vested over six months from the date of issuance, resulting in the recognition of $7.3 million and $2.4 million in stock-based compensation expense within selling, general, and administrative expenses during the years ended December 31, 2025 and 2024, respectively. The second tranche consisted of 533,333 warrants issued with an exercise price contingent upon a 5-day measurement period following the Company’s initial listing on a national exchange. Following the Company’s direct listing, the exercise price for this second tranche was formally established on October 22, 2025, at $5.28 per share. The warrants in the second tranche vested upon the completion of the direct listing, and accordingly, the Company recognized $3.2 million in stock-based compensation expense within selling, general, and administrative expenses during the year ended December 31, 2025 as a result. The fair value of the second tranche was determined as of the date the exercise price was established using the Black-Scholes option pricing model, using inputs consistent with those described in Note 8, except that the expected term reflected the actual contractual term of the warrants as of the valuation date.

 

All outstanding warrants issued under this agreement are classified within stockholders’ equity.

 

Stock Issuance Costs

 

Stock issuance costs consist of fees and commissions paid to service providers and electronic investor platforms in connection with our ELOC and Regulation Crowdfunding offerings. For the year ended December 31, 2025, the Company recorded stock issuance costs of $1.6 million, which included $375,000 satisfied through the issuance of 45,127 shares of Class B Common Stock to the Company’s ELOC service provider at a price of $8.31 per share. The Company recorded $1.8 million in stock issuance costs recorded for the year ended December 31, 2024.