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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 12 Months Ended
Dec. 31, 2025
Accounting Policies [Abstract]  
Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

 

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”). The 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.

 

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

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.

 
Reclassification

Reclassification

 

Certain prior period amounts have been reclassified to conform to the current period presentation. Specifically, research and development tax credits previously presented as a reduction of operating expenses have been reclassified to other income. This reclassification had no impact on total net loss, total assets, or stockholders’ equity.

 

Additionally, stock-based compensation in the Consolidated Statements of Cash Flows for the year ended December 31, 2024 has been revised by $28 thousand to conform to the current period presentation, with an offsetting adjustment to accrued liabilities. This revision had no impact on total net loss, total assets, or stockholders’ equity. 

 
Reverse Stock Split

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 and preferred stock outstanding as effected on August 5, 2025.

 
Fair Value of Financial Instruments

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:

 

Description  Level 1   Level 2   Level 3   Total 
   As of December 31, 2025 
Description  Level 1   Level 2   Level 3   Total 
Assets:                    
Money market fund  $4,799   $     -   $      -   $4,799 
Total  $4,799   $-   $-   $4,799 

 

Description  Level 1   Level 2   Level 3   Total 
    As of December 31, 2024  
Description   Level 1     Level 2     Level 3     Total  
Assets:                                
Money market fund   $ 8,770     $       -     $      -     $ 8,770  
Total   $ 8,770     $ -     $ -     $ 8,770  

 

As of December 31, 2025 and 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

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 December 31, 2025 and 2024, cash and cash equivalents contained $4.1 million of unearned refundable customer reservation fees.

 
Grant Funds Receivable

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

 

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

 

Computers, hardware and software   3 years
Leasehold improvements   shorter of remaining lease term or 5 years
Research and development equipment   5 years
Other equipment   5 years

 

 
Long-Lived Assets

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 year ended December 31, 2025, we recorded no impairment charges on long-lived assets. For the year ended December 31, 2024, we recorded impairment charges of $0.8 million related to construction-in-progress assets, as further discussed in Note 4 to our consolidated financial statements.

 
Unearned Reservation Fees

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

Leases

 

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

 

  ● A right-of-use (ROU) asset representing the right to use the leased asset.
     
  ● A lease liability representing the future lease payments discounted to present value.

 

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

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 December 31, 2025 and 2024, we had approximately $2.1 million and $9.0 million in open purchase orders, respectively.

 
Revenue Recognition

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:

 

  ● Performance obligations: The Company will assess its contracts with customers to identify the distinct performance obligations and allocate the transaction price accordingly.
     
  ● Variable consideration: If applicable, the Company will estimate the amount of variable consideration to which it is entitled based on the probability-weighted approach.
     
  ● Right of return: If customers have a right to return products, the Company will recognize a refund liability and adjust revenue accordingly.
     
  ● Principal versus agent: The Company will determine whether it acts as a principal or an agent in its transactions, which will impact the presentation of revenue in the financial statements.

 

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.

 
Advertising Costs

Advertising Costs

 

The Company expenses advertising and promotional costs as incurred. Advertising costs are included within selling, general, and administrative expenses in the accompanying consolidated statements of operations. Advertising expenses were $1.3 million and $2.2 million for the years ended December 31, 2025 and 2024, respectively.

 
Income Taxes

Income Taxes

 

The Company provides for income taxes using the asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of December 31, 2025, and 2024, the Company had a full valuation allowance against deferred tax assets.

  

The Company is subject to the provisions of ASC 740-10-25, Income Taxes (ASC 740). ASC 740 prescribes a more likely-than-not threshold for the financial statement recognition of uncertain tax positions. ASC 740 clarifies the accounting for income taxes by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. On a quarterly basis, the Company undergoes a process to evaluate whether income tax accruals are in accordance with ASC 740 guidance on uncertain tax positions. There are currently no open Federal or State audits. The Company has not recorded any liability for uncertain tax positions as of December 31, 2025, and 2024.

 

In July 2025, the One Big Beautiful Bill Act (Public Law 119-21) was enacted. The Company recognized the income tax effects of the legislation in the period of enactment in accordance with ASC 740. The legislation did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2025. The Company will continue to evaluate the impact of the legislation on future periods.

 
Stock-Based Compensation

Stock-Based Compensation

 

The Company measures and recognizes compensation expense for all stock-based awards, including stock options and restricted stock units (“RSUs”), granted to employees, directors, and non-employees based on their estimated grant-date fair value.

 

●Stock Options: The fair value of stock options is estimated at the date of grant using the Black-Scholes option-pricing model.

 

 

●Restricted Stock Units: The fair value of RSUs is determined based on the closing market price of the Company’s Class B Common Stock on the date of 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.

  
Research and Development

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

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

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

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, restricted stock units, stock options and warrants issued under the Company’s 2025 Omnibus Equity Incentive Plan and 2021 Stock Option and Incentive Plan.

 

Potentially dilutive securities outstanding were as follows:

  

   December 31, 2025   December 31, 2024 
Preferred stock   -    3,721,394 
Restricted stock units   381,414    - 
Stock options   6,652,405    3,803,417 
Warrants   868,167    868,167 
Potentially dilutive securities   7,901,986    8,392,978 

 

For the years ended December 31, 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):

 

   Class A   Class B   Class A   Class B 
   Year Ended December 31, 
   2025   2024 
   Class A   Class B   Class A   Class B 
Numerator                    
Allocation of losses  $(32,933)  $(10,974)  $(28,013)  $(6,894)
Denominator                    
Weighted average shares outstanding   18,371,259    6,121,522    18,486,999    4,549,810 
Basic net loss per share   (1.79)   (1.79)   (1.52)   (1.52)

 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

Recently Adopted Accounting Pronouncements

 

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update requires public business entities to disclose significant segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”). The Company adopted this standard effective January 1, 2025. As the Company operates as a single reportable segment, the adoption impacted disclosures only and did not have a material effect on the Company’s consolidated financial position or results of operations.

 

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The Company adopted this standard effective January 1, 2025. As the Company maintains a full valuation allowance against its deferred tax assets, the adoption did not have a material impact on the Company’s consolidated financial statements or disclosures.

 

In March 2024, the FASB issued ASU 2024-01, Compensation—Stock Compensation (Topic 718): Scope Application to Profits Interest and Similar Awards. This update clarifies the application of Topic 718 to certain share-based payment awards to determine if they should be accounted for as compensation or as a reduction of the transaction price. The Company adopted this standard effective January 1, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements.

 

In April 2024, the FASB issued ASU 2025-06, Codification Improvements—Amendments to Subtopic 350-40 (Internal-Use Software). This update simplifies the accounting for internal-use software and clarifies capitalization milestones. The Company adopted this standard effective January 1, 2025. The adoption did not have a material impact on the Company’s consolidated financial statements or its policies regarding capitalized software and manufacturing system development costs.

 
Accounting Pronouncements Issued But Not Yet Adopted

Accounting Pronouncements Issued But Not Yet Adopted

 

In November 2024, the FASB 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, specific natural expense categories (such as employee compensation, depreciation, and amortization) that are included in relevant expense captions on the face of the income statement. For the Company, the standard is effective for annual reporting periods beginning after December 15, 2026. The Company is currently evaluating the impact of this standard on its financial statement disclosures.