NOTE 20 – SUBSEQUENT EVENTS 

Company management has evaluated subsequent events through May 20, 2025, which is the date these financial statements were available to be issued. Except as discussed below, management has determined that there were no material subsequent events which required recognition, adjustment to or disclosure in the financial statements:

Stock issuances after the balance sheet date

After the balance sheet date and by May 15, 2025, the Company issued 43,430,165 shares of common stock, mainly upon exercise of warrants and conversion of notes described in Note 7 - Debt and Note 8 - Warrants and other derivative liabilities and fair value measurements above, and in accordance with contracts with consultants (Note 11 – Share-based Compensation).

Additional investments after the balance sheet date

After the balance sheet date, pursuant to additional investment rights set forth in existing securities purchase agreements and in connection with entering into a securities purchase agreement, the Company issued to certain investors Senior Secured Convertible Notes and five-year warrants. These Notes and Warrants have terms and conditions similar to those described in Note 7 - Debt and Note 8 - Warrants and other derivative liabilities and fair value measurements above, with the following main differences:

1. Senior secured convertible notes with a principal of $4.2 million (with a conversion price floor of $0.08 per share, not subject to adjustments) and 3,599.39 warrants with exercise price of $2,580 and a floor in cashless exercise of warrants of $0.01 (not subject to adjustments).

2. Senior secured convertible notes with a principal of $0.5 million (with a conversion price floor of $0.02 per share (not subject to adjustment)) and 150,375.94 warrants with exercise price of $800 (giving effect to reverse stock split, see Note 1 - Description of business and basis of presentation) and a floor in cashless exercise of warrants of $0.01 (not subject to adjustments).

3. Senior secured convertible notes with a principal of $2.4 million (with a conversion price floor of $0.05 per share, not subject to adjustments) and 3,228 warrants with exercise price of $1,620 and a floor in cashless exercise of warrants of $0.01 (not subject to adjustments).

4. Senior secured convertible notes with a principal of $1.8 million (with a conversion price floor of $0.37 per share, not subject to adjustments) and 20,334 warrants with exercise price of $194 and a floor in cashless exercise of warrants of $0.01 (not subject to adjustments).

5. Senior secured convertible notes with a principal of $1.6 million (with a conversion price floor of $0.15 per share, not subject to adjustments) and 21,052,632 warrants with exercise price of $0.16 and a floor in cashless exercise of warrants of $0.01 (not subject to adjustments).

Default on Senior Secured Convertible Notes

The Senior convertible notes outstanding on April 15, 2025 (in amount of approximately $35.1 million) and relevant accumulated interest (in amount of approximately $0.8 million) were in cross-default due to the non-payment of portion of the loan that matured. Starting from that date, the interest rate increased from 15% to 20%. As of the date these financial statements were available to be issued, none of the investors demanded immediate payment of the notes and outstanding interest in cash.

GEM Settlement Agreement

On May 9, 2025, the Company entered into a Settlement Agreement and Release with GEM Yield Bahamas Limited and GEM Global Yield LLC SCS (together, “GEM”) to resolve the ongoing GEM litigation. Under the agreement, GEM has a 55-day due diligence period, subject to extension, to evaluate the transfer of the Company’s Mishawaka assets in full satisfaction of the judgment. Collection activities are suspended during this period. As a result of the agreement, the Company reclassified certain assets to noncurrent assets held for sale due to settlement on the balance sheet to reflect the expected transfer. In addition, the Company recorded a $250,000 legal accrual associated with the settlement, classified under general and administrative expenses.

Bollinger receivership

As further described in Note 19 - Contingencies and claims, on May 7, 2025, the United States District Court for the Eastern District of Michigan issued an order appointing a receiver over the Company's majority-owned subsidiary Bollinger Motors in response to litigation initiated by Robert Bollinger regarding untimely payment of interest on long-term loan. 

Reverse stock split

On April 10, 2025, the Company filed a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a one-for-one hundred (1-for-100) reverse stock split of its common stock, par value $0.001 per share (the “Reverse Stock Split”). Previously, at the Annual Meeting of Stockholders held on March 13, 2025, the Company’s stockholders approved a proposal to authorize a reverse stock split of the common stock at a ratio within the range of 1-for-2 to 1-for-100, as determined by the Board of Directors of the Company. The Reverse Stock Split became effective on April 11, 2025 (the “Effective Time”) and was applied retroactively in these consolidated financial statements (see Note 1).

As a result of the Reverse Stock Split, all one hundred (100) shares of the Company’s pre-Reverse Stock Split common stock combined and automatically became one (1) share of common stock. The Company’s common stock began trading on a split-adjusted basis when the Nasdaq opened for trading on April 11, 2025. After the Effective Time, the number of outstanding shares of common stock of the Company was reduced from approximately 238.7 million to approximately 2.4 million.

The Reverse Stock Split did not change the authorized number of shares or the par value of the common stock nor modify any voting rights of the common stock.

No fractional shares were issued in connection with the Reverse Stock Split. All shares of common stock that were held by a stockholder will be aggregated subsequent to the Reverse Stock Split and each fractional share resulting from such aggregation held by a stockholder were rounded up to the next whole share.

Also, at the Effective Time, the number of shares of common stock issuable upon conversion or exercise of notes, warrants, preferred stock, and other convertible securities, as well as any commitments to issue securities, that provide for adjustments in the event of a reverse stock split were appropriately adjusted pursuant to their applicable terms for the Reverse Stock Split. If applicable, the conversion price for each outstanding note and for each outstanding share of preferred stock and the exercise price for each outstanding warrant were increased, pursuant to their terms, in inverse proportion to the 1-for-100 split ratio such that upon conversion or exercise, the aggregate conversion price for conversion of each note or preferred stock and the aggregate exercise price payable by the warrant holder to the Company for shares of common stock subject to such warrant remain approximately the same as the aggregate conversion or exercise price, as applicable, prior to the Reverse Stock Split. Furthermore, pursuant to the terms of the Company’s 2022 Equity Incentive Plan, as amended, shares of common stock available for issuance are not subject to adjustment as a result of the Reverse Stock Split.