v3.26.1
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 6 Months Ended
Jun. 30, 2026
Accounting Policies [Abstract]  
Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

 

The accompanying condensed consolidated financial statements included herein have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). The condensed 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.

 

Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted as permitted by such rules and regulations; however, the Company believes the disclosures are adequate to make the information presented not misleading.

 

The interim financial information is unaudited, but reflects all normal recurring adjustments that are necessary in the Company’s opinion to fairly present the information set forth herein. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2025 included in Form 10-K filed with the SEC on March 30, 2026. Interim results are not necessarily indicative of the results expected for the full year.

 

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. The Co-Chief Executive Officers function collectively as our chief operating decision maker.

 
Use of Estimates

Use of Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires the Company 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 amounts in the condensed consolidated financial statements have been reclassified to conform to the current period presentation.

 
Correction of Immaterial Error and Out of Period Adjustments

Correction of Immaterial Error and Out of Period Adjustments

 

During the quarter ended June 30, 2026, management identified an error related to the accounting for contingent considerations within its technology licensing agreement (“TLA”) entered into in 2022. Specifically, that the recording of amounts related to those stock-based contingent consideration as expenses and paid-in capital prior to such liabilities being incurred was not appropriate under GAAP.

 

The error resulted in an overstatement of additional paid-in capital and an overstatement of accumulated deficit in previously issued interim and annual financial statements beginning with the year ended December 31, 2022. The error had no effect on the statement of cash flows previously reported due to its non-cash operating nature and has zero effect on total stockholders’ equity.

 

The Company evaluated the error qualitatively and quantitatively in accordance with SEC Staff Accounting Bulletin Nos. 99 and 108 and determined it was immaterial to each previously issued reporting period. Because correcting the cumulative amount solely through a catch-up adjustment in the current period would materially affect the comparability of the current period financial statements, management revised prior period comparative financial information for periods ended on or prior to December 31, 2024 and recorded an out-of-period adjustment of $0.4 million in the three months ended June 30, 2026 to reduce stock-based compensation expense and additional paid-in capital for amounts previously recorded in the year ended December 31, 2025 and the three months ended March 31, 2026. The net loss for the three months ended June 30, 2026 includes this adjustment.

 

 

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of December 31, 2024:

 

(in thousands)  As Previously Reported   Adjustment   As Revised 
Additional paid-in capital   304,584    (2,631)   301,953 
Accumulated deficit   (277,412)   2,631    (274,781)

 

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of March 31, 2025:

 

(in thousands)  As Previously Reported   Adjustment   As Revised 
Additional paid-in capital   311,616    (2,631)   308,985 
Accumulated deficit   (288,279)   2,631    (285,648)

 

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of June 30, 2025:

 

(in thousands)  As Previously Reported   Adjustment   As Revised 
Additional paid-in capital   327,172    (2,631)   324,541 
Accumulated deficit   (300,350)   2,631    (297,719)

 

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of September 30, 2025:

 

(in thousands)  As Previously Reported   Adjustment   As Revised 
Additional paid-in capital   333,078    (2,631)   330,447 
Accumulated deficit   (305,839)   2,631    (303,208)

 

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of December 31, 2025:

 

(in thousands)  As Previously Reported   Adjustment   As Revised 
Additional paid-in capital   341,887    (2,631)   339,256 
Accumulated deficit   (321,319)   2,631    (318,688)

 

The following table presents the impact of the correction on the Company’s consolidated balance sheet as of March 31, 2026:

 

(in thousands)  As Previously Reported   Adjustment   As Revised 
Additional paid-in capital   361,153    (2,631)   358,522 
Accumulated deficit   (331,513)   2,631    (328,882)

 

Additionally, during the quarter ended June 30, 2026, management identified an error in the presentation of financed arrangements for certain prepaid insurance policies and software licenses which were incorrectly presented on a net basis within prepaid assets, resulting in an understatement of financed arrangements and understatement of prepaids and other assets. Management evaluated the correction and determined that the effect of the correction was not material on previously reported financial statements and recorded the correction as of the current period. The out-of-period adjustment related to the balances of the financed arrangements as of December 31, 2025 was $0.7 million with a corresponding offset to prepaid assets. There was no impact on the statements of operations.

 
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 the Company as of the balance sheet dates.

 

The following are the classes of assets and liabilities measured at fair value (amounts in thousands):

  

Description            
   As of June 30, 2026 
Description  Level 1   Level 2   Level 3   Total 
Assets:                
Money market fund  $4,788   $-   $-   $4,788 
Total  $4,788   $-   $-   $4,788 

 

Description            
   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 

 

As of June 30, 2026 and December 31, 2025, the respective carrying value of cash and cash equivalents, receivables, other current assets, accounts payable, unearned reservation fees and financing arrangements approximated their fair values.

 
Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all highly liquid cash instruments purchased with an original maturity of three months or less to be cash equivalents. As of June 30, 2026 and December 31, 2025, cash and cash equivalents contained $4.1 million and $4.1 million, respectively, of unearned refundable customer reservation fees.

 
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
Machinery, tooling, and equipment 5 - 10 years
Other equipment 5 years
Production tooling 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.

 
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.

 
Contracts Containing Share-Based Considerations

Contracts Containing Share-Based Considerations

 

Contracts that must be settled in a variable number of the Company’s equity securities based on a fixed dollar amount are classified as liabilities and remeasured to fair value at each reporting date. When such a contract is settled through the issuance of stock, or when the number of shares to be issued becomes fixed, the liability is reclassified to additional paid-in capital. No such liabilities existed as of June 30, 2026. Accrued liabilities related to such contracts were $0.2 million as of December 31, 2025.

 

During the three months ended June 30, 2026, the Company settled previously accrued liabilities of $0.8 million through issuance of equity classified instruments.

 
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 general, selling, and administrative expenses in the accompanying consolidated statements of operations. Advertising expenses were $0.1 million and $0.4 million for the three months ended June 30, 2026 and 2025, respectively, and $0.2 million and $0.8 million for the six months ended June 30, 2026 and 2025, respectively.

 
Income Taxes

Income Taxes

 

The Company provides for income taxes using the asset and liability approach. As of June 30, 2026, the Company continues to maintain a full valuation allowance against its net deferred tax assets, as the Company believes it remains more likely than not that they will not be realized. There have been no material changes to the Company’s liability for uncertain tax positions since December 31, 2025.

 
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. Equity instruments issued in connection with financing transactions or settlements of liabilities are not classified as stock-based compensation.

 

  ● 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 Equity Incentive Plans.

 

 

Potentially dilutive securities outstanding were as follows:

  

   June 30, 2026   June 30, 2025 
Preferred stock   -    3,721,394 
Restricted stock units   637,895    - 
Stock options   6,847,074    4,404,688 
Warrants   6,386,337    868,167 
Stock awarded and not yet issued   105,000    - 
Potentially dilutive securities   13,976,306    8,994,249 

 

For the three and six months ended June 30, 2026 and 2025, 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 share and per share amounts):

  

                 
   Three Months Ended June 30, 
   2026   2025 
   Class A   Class B   Class A   Class B 
Numerator:                    
Allocation of losses  $(3,552)  $(7,332)  $(9,531)  $(2,540)
Denominator:                    
Weighted average shares outstanding   12,024,460    24,819,098    18,486,999    4,925,770 
Basic net loss per share  $(0.30)  $(0.30)  $(0.52)  $(0.52)

 

                 
   Six Months Ended June 30, 
   2026   2025 
   Class A   Class B   Class A   Class B 
Numerator:                    
Allocation of losses  $(7,403)  $(13,676)  $(18,105)  $(4,833)
Denominator:                    
Weighted average shares outstanding   12,119,502    22,388,172    18,486,999    4,935,209 
Basic net loss per share  $(0.61)  $(0.61)  $(0.98)  $(0.98)

 
Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires public business entities to disclose specific natural expense categories within relevant expense captions. 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.

 

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which is intended to improve the guidance in Topic 270 by enhancing the navigability of required interim disclosures and clarifying the applicability of the guidance. The update also introduces a disclosure principle requiring the disclosure of events occurring since the end of the most recent annual reporting period that have a material impact on the entity. For the Company, the standard is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of this standard on its financial statement disclosures.

 

In May 2026, the FASB issued ASU No. 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818). The ASU establishes authoritative guidance for the accounting of environmental credits and environmental credit obligations, including recognition, measurement, presentation, and disclosure requirements, in an effort to reduce diversity in practice and increase consistency of application across reporting entities. The ASU is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Adoption of this ASU should be applied on a retrospective basis through a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets on the balance sheet) as of the beginning of the annual reporting period of adoption, without recasting for any financial statement information before the period of adoption. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the provisions of this ASU.