{"url_path":"/sec/turb/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 EXHIBITS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1963439/0001213900-26-057672-index.html","accession_number":"0001213900-26-057672","cik":"0001963439","ticker":"TURB","issuer_name":"Turbo Energy, S.A.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1963439/0001213900-26-057672-index.html","primary_entity_key":"0001963439","primary_entity_name":"Turbo Energy, S.A."},"word_count":14972,"has_tables":true,"body_markdown":"**ITEM 19. EXHIBITS** \n\n \n\n**Exhibit No.**\n \n**Description**\n\n1.1\n \n[English Translation of Certificate of Incorporation and Bylaws of Turbo Energy, S.A. (was incorporated under the name of Distritech Solutions S.L.) on September 18, 2013 under the laws of the Kingdom of Spain (incorporated by reference to Exhibit 3.1 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex3-1_turboenergy.htm)\n\n1.2\n \n[English Translation of Bylaws of TURBO ENERGY, S.L. (incorporated by reference to Exhibit 3.2 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex3-2_turboenergy.htm)\n\n1.3\n \n[English Translation of Deed of Transformation from “TURBO ENERGY, S.L.” to “TURBO ENERGY, S.A.”, dated February 8, 2023 (incorporated by reference to Exhibit 3.3 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex3-3_turboenergy.htm)\n\n1.4\n \n[English Translation of Public Deed of Amendment of the Bylaws of Turbo Energy, S.A. (incorporated by reference to Exhibit 3.4 to the Amendment No.3 to the Form F-1 filed on September 15, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023077107/ea185011ex3-4_turboenergy.htm)\n\n2.1*\n \n[Description of American Depositary Shares Registered Pursuant to Section 12 of the Exchange Act as of December 31, 2025](ea029026401ex2-1.htm)\n\n2.2\n \n[Form of Deposit Agreement (incorporated by reference to Exhibit 99(a) to the Registration Statement on Form F-6 ((File No. 333- 273204) filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1472033/000119380523000969/e618767_ex99-a.htm)\n\n2.3\n \n[Form of American Depositary Receipt evidencing American Depositary Shares (included in Exhibit 2.2)](http://www.sec.gov/Archives/edgar/data/1472033/000119380523000969/e618767_ex99-a.htm)\n\n4.1\n \n[Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated by reference to Exhibit 10.1 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-1_turboenergy.htm)\n\n4.2\n \n[Form of Director Agreement between the Registrant and its executive directors (incorporated by reference to Exhibit 10.2 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-2_turboenergy.htm)\n\n4.3\n \n[Form of Independent Director Agreement between the Registrant and its independent directors (incorporated by reference to Exhibit 10.3 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-3_turboenergy.htm)\n\n4.4\n \n[Turbo Energy, S.A. 2023 Equity Incentive Plan (incorporated by reference to Exhibit 10.4 to the Form F-1/A2 filed on August 28, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023071192/ea184210ex10-4_turboenergy.htm)\n\n4.5\n \n[Form of Share Option Agreement (incorporated by reference to Exhibit 10.5 to the Form F-1/A2 filed on August 28, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023071192/ea184210ex10-5_turboenergy.htm)\n\n4.6\n \n[Form of Restricted Share Award Agreement (incorporated by reference to Exhibit 10.6 to the Form F-1/A2 filed on August 28, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023071192/ea184210ex10-6_turboenergy.htm)\n\n4.7\n \n[English Translation of public deed with protocol number 2,522 between Enrique Selva Bellvis and Crocodile Investment S.L., dated November 29, 2013 (incorporated by reference to Exhibit 10.7 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-7_turboenergy.htm)\n\n4.8\n \n[English Translation of Share Purchase Agreement between Crocodile Investment S.L. and Don Francisco de Borja Pellicer Lopez, dated March 06, 2015 (incorporated by reference to Exhibit 10.8 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-8_turboenergy.htm)\n\n4.9\n \n[English Translation of Office Lease Agreement between D. Vicente Moreno Valencia and D. Enrique Selva Bellvis, dated June 1, 2022 (incorporated by reference to Exhibit 10.9 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-9_turboenergy.htm)\n\n \n\n110\n\n \n\n \n\n4.10\n \n[English Translation of Mercantile Deed of Constitution between Crocodile Investment S.L. and Umbrella Solar Investment S.A. (previously named Umbrella Capital S.L.), dated March 20, 2018 (incorporated by reference to Exhibit 10.10 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-10_turboenergy.htm)\n\n4.11\n \n[English Translation of Deed of increasing share capital for Turbo Energy S.L.U. (previously Solar Rocket S.L.) by the shareholder, Umbrella Solar Investment S.A. (previously named Umbrella Capital S.L.). dated February 11, 2021 (incorporated by reference to Exhibit 10.11 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-11_turboenergy.htm)\n\n4.12\n \n[English Translation of public deed with protocol number 2.150. between Don Manuel Cercós D´Aversa and Umbrella Solar Investment S.A., dated May 31, 2022 (incorporated by reference to Exhibit 10.12 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-12_turboenergy.htm)\n\n4.13\n \n[English Translation of Deed of Elevation to the Public of Agreements Social Related to Merger by Absorption of Solar Rocket, SL, as the Absorbing Company, and Turbo Energy, SLU, as the Absorbed Company, between Solar Rocket, SL and Turbo Energy, SLU, dated April 8, 2021 (incorporated by reference to Exhibit 10.13 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex10-13_turboenergy.htm)\n\n4.14\n \n[Shareholder Loan Agreement Between Turbo Energy, S.A. and Umbrella Solar Investment S.A., dated June 30, 2023 (incorporated by reference to Exhibit 10.14 to the Form F-1/A filed on July 26, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023059929/ea182261ex10-14_turboenergy.htm)\n\n4.15\n \n[Agreement between Turbo Energy, S.A. and Enerfip, dated August 26, 2024 (incorporated by reference to Exhibit 4.15 to the Annual Report on Form 20-F for the fiscal year ended December 31, 2024 filed on April 25, 2025)](http://www.sec.gov/Archives/edgar/data/1963439/000121390025035610/ea023806701ex4-15_turbo.htm)\n\n4.16\n \n[Strategic Advisory Agreement between Turbo Energy, S.A. and Connection Holdings, LLC, dated October 18, 2024 (incorporated by reference to Exhibit 10.1 to Form 6-K filed on October 22, 2024](http://www.sec.gov/Archives/edgar/data/1963439/000121390024089656/ea021817101ex10-1_turbo.htm)\n\n4.17\n \n[Strategic Advisory Agreement between Turbo Energy, S.A. and Julian Groves, dated December 2, 2024 (incorporated by reference to Exhibit 10.1 to Form 6-K filed on December 6, 2024)](http://www.sec.gov/Archives/edgar/data/1963439/000121390024106487/ea022392901ex10-1_turbo.htm)\n\n4.18\n \n[Sales Agreement dated March 25, 2026, between Turbo Energy, S.A. and A.G.P./Alliance Global Partners (incorporated by reference to Exhibit 10.1 to Form 6-K filed on March 25, 2026)](http://www.sec.gov/Archives/edgar/data/1963439/000121390026034092/ea028294301ex10-1.htm)\n\n4.19\n \n[Form of Securities Purchase Agreement, dated March 11, 2026 between Turbo Energy, S.A. and purchaser (incorporated by reference to Exhibit 10.1 to Form 6-K filed on March 13, 2026)](http://www.sec.gov/Archives/edgar/data/1963439/000121390026027680/ea028157601ex10-1.htm)\n\n4.20\n \n[Placement Agency Agreement, dated March 11, 2026, between Turbo Energy, S.A.  and A.G.P./Alliance Global Partners (incorporated by reference to Exhibit 10.2 to Form 6-K filed on March 13, 2026)](http://www.sec.gov/Archives/edgar/data/1963439/000121390026027680/ea028157601ex10-2.htm)\n\n8.1*\n \n[List of subsidiaries of the registrant](ea029026401ex8-1.htm)\n\n11.1\n \n[Code of Ethics and Business Conduct of the Registrant (incorporated by reference to Exhibit 14.1 to the Form F-1 filed on July 11, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023056001/ea181409ex14-1_turboenergy.htm)\n\n11.2*\n \n\n[Turbo Energy, S.A. Second Amended and Restated Insider Trading Policy](ea029026401ex11-2.htm)\n\n12.1*\n \n[Certifications of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-1(a)](ea029026401ex12-1.htm)\n\n12.2*\n \n[Certifications of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-1(a)](ea029026401ex12-2.htm)\n\n13.1**\n \n[Certifications of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ea029026401ex13-1.htm)\n\n13.2**\n \n[Certifications of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](ea029026401ex13-2.htm)\n\n15.1*\n \n[Consent of TAAD LLP, Independent Registered Public Accounting Firm](ea029026401ex15-1.htm)\n\n97.1\n \n[Turbo Energy, S.A. Clawback Policy (incorporated by reference to Exhibit 99.1 in the Report on Form 6-K filed on December 1, 2023)](http://www.sec.gov/Archives/edgar/data/1963439/000121390023092037/ea189394ex99-1_turboenergy.htm)\n\n101.INS\n \nInline XBRL Instance Document\n\n101.SCH\n \nInline XBRL Taxonomy Extension Schema Document.\n\n101.CAL\n \nInline XBRL Taxonomy Extension Calculation Linkbase Document.\n\n101.DEF\n \nInline XBRL Taxonomy Extension Definition Linkbase Document.\n\n101.LAB\n \nInline XBRL Taxonomy Extension Label Linkbase Document.\n\n101.PRE\n \nInline XBRL Taxonomy Extension Presentation Linkbase Document.\n\n104\n \nCover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).\n\n \n\n*\nFiled with this annual report on Form 20-F\n\n \n\n**\nFurnished with this annual report on Form 20-F\n\n \n\n111\n\n \n\n \n\n**SIGNATURES**\n\n \n\nThe registrant hereby certifies\nthat it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this\nannual report on its behalf.\n\n \n\n \n**Turbo Energy, S.A.**\n\n \n \n\n \nBy:\n/s/ Mariano Soria\n\n \nName:\nMariano Soria\n\n \nTitle:\nChief Executive Officer\n\n \n\nDate: May 15, 2026\n\n \n\n112\n\n \n\n** **\n\n**TURBO ENERGY, S.A.**\n\n**Consolidated Financial Statements**\n\n**For the Years Ended December 31, 2025, 2024\nand 2023**\n\n**(Expressed in Euro)**\n\n** **\n\n**INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS**\n\n \n\n    **Page**\n\n[Report of Independent Registered Public Accounting Firm (PCAOB ID: 5854)](#aa_001)   F-2\n\n     \n\n[Consolidated Statements of Financial Position](#f_001)   F-3\n\n     \n\n[Consolidated Statements of Operations](#f_002)   F-4\n\n     \n\n[Consolidated Statements of Changes in Shareholders’ Equity](#f_003)   F-5\n\n     \n\n[Consolidated Statements of Cash Flow](#f_004)   F-6\n\n     \n\n[Notes to Consolidated Financial Statements](#f_005)   F-7\n\n \n\nF-1\n\n \n\n \n\n \n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n** **\n\nTo the Board of Directors and Stockholders of Turbo Energy S.A.\n\n \n\nOpinion on the Financial Statements\n\n** **\n\nWe have audited the accompanying consolidated\nstatements of financial position of Turbo Energy S.A. (the “Company”) as of December 31, 2025 and 2024 and the related consolidated\nstatements of operations, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December\n31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements\npresent fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024 and the\nresults of its operations and its cash flows for each of the years in the three-year period ended December 31, 2025, in conformity with\nthe International Financial Reporting Standards as issued by the International Accounting Standards Board.\n\n \n\nBasis for Opinion\n\n** **\n\nThese consolidated financial statements\nare the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial\nstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United\nStates) PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the\napplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance\nwith the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether\nthe financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to\nassess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond\nto those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.\nOur audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating\nthe overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\n \n\nOur audits included performing procedures\nto assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures\nthat respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the\nconsolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by\nmanagement, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide\na reasonable basis for our opinion.\n\n \n\n \n\n**/s/ TAAD LLP**\n\n \n\nWe have served as the Company’s auditor since 2022.\n\nDiamond Bar, CA\n\nMay 15, 2026\n\n \n\nF-2\n\n \n\n** **\n\n**TURBO ENERGY, S.A.**\n\n**Consolidated Statements of Financial Position**\n\n**(Expressed in Euro)**\n\n \n\n  \n  \nDecember 31,  \nDecember 31, \n\nAs at \nNote \n2025  \n2024 \n\n  \n  \n   \n  \n\nAssets \n  \n   \n  \n\nCurrent \n  \n   \n  \n\nCash and cash equivalent \n2 \n€493,129  \n€2,384,625 \n\nAccounts receivable and other receivables \n4 \n 1,739,775  \n 2,926,132 \n\nInventories \n5 \n 3,444,184  \n 1,951,822 \n\nAmount due from related parties \n11 \n 10,443,887  \n 246,220 \n\nPrepaid expense \n6 \n 3,643,077  \n 1,020,384 \n\nInvestments \n7 \n 34,557  \n 52,050 \n\nTotal Current Assets \n  \n 19,798,609  \n 8,581,233 \n\n  \n  \n    \n   \n\nNon- Current Assets \n  \n    \n   \n\nProperty and equipment, net \n8 \n 214,966  \n 273,862 \n\nIntangible assets, net \n9 \n 2,102,151  \n 1,712,975 \n\nRight-of-use assets \n16 \n 21,444  \n 35,311 \n\nDeferred tax assets \n  \n 2,272,573  \n 2,043,812 \n\nTotal Assets \n  \n€24,409,743  \n€12,647,193 \n\n  \n  \n    \n   \n\nLiabilities and Shareholders’ Equity \n  \n    \n   \n\nCurrent Liabilities \n  \n    \n   \n\nAccounts payable and accrued liabilities \n10 \n€12,647,530  \n€2,910,818 \n\nAccrued interest payable \n12 \n 355,711  \n 14,901 \n\nAmount due to related parties \n11 \n 2,929,117  \n 1,792,045 \n\nLease liabilities - current portion \n16 \n 12,203  \n 32,367 \n\nBank loans - current portion \n13 \n 4,510,831  \n 4,369,949 \n\nDebt bond - current portion \n12 \n 253,352  \n 91,411 \n\nTotal Current Liabilities \n  \n 20,708,744  \n 9,211,491 \n\n  \n  \n    \n   \n\nNon-Current Liabilities \n  \n    \n   \n\nLease liabilities \n16 \n 10,059  \n 3,958 \n\nDeferred tax liabilities \n  \n 30,595  \n 33,339 \n\nDebt bond - noncurrent portion \n12 \n 2,060,705  \n 774,471 \n\nTotal Liabilities \n  \n 22,810,103  \n 10,023,259 \n\n  \n  \n    \n   \n\nShareholders’ Equity \n  \n    \n   \n\nShare Capital \n14 \n 2,754,285  \n 2,754,285 \n\nAdditional paid in capital \n14 \n 3,940,606  \n 3,808,591 \n\nReserve \n15 \n 1,411,846  \n 1,411,846 \n\nAccumulated Deficit \n  \n (6,507,097) \n (5,350,788)\n\nTotal Shareholders’ Equity \n  \n 1,599,640  \n 2,623,934 \n\n  \n  \n    \n   \n\nTotal Liabilities and Shareholders’ Equity \n  \n€24,409,743  \n€12,647,193 \n\n \n\nThe accompanying notes are an integral part of\nthese consolidated financial statements.\n\n \n\nF-3\n\n \n\n** **\n\n**TURBO\nENERGY, S.A.**\n\n**Consolidated Statements of Operations**\n\n**(Expressed in Euro)**\n\n** **\n\n  \n  \nYear ended December 31, \n\n  \nNote \n2025  \n2024  \n2023 \n\n  \n  \n   \n   \n  \n\nRevenue \n18 \n€9,350,238  \n€9,109,968  \n€11,723,132 \n\nRevenue - related parties \n11,18 \n 10,524,288  \n 306,651  \n 1,380,547 \n\nOther operating income \n  \n 111,974  \n 221,393  \n 37,092 \n\nTotal Revenue \n  \n 19,986,500  \n 9,638,012  \n 13,140,771 \n\n  \n  \n    \n    \n   \n\nCost and Expenses \n  \n    \n    \n   \n\nCost of revenues \n19 \n 16,089,421  \n 9,080,343  \n 10,842,319 \n\nCost of revenues - related parties \n11,18 \n \n-\n  \n \n-\n  \n 1,201,244 \n\nSelling and administrative \n20 \n 2,669,997  \n 2,149,157  \n 1,529,085 \n\nSelling and administrative - related parties \n11,20 \n 360,787  \n 848,832  \n 1,010,769 \n\nSalaries and benefits \n  \n 1,487,979  \n 1,275,208  \n 1,105,128 \n\nSalaries and benefits - related parties \n11 \n 140,333  \n 116,843  \n 9,999 \n\nBad debt expense \n4 \n 13,214  \n 138,941  \n 84,394 \n\nTotal Cost and Expenses \n  \n 20,761,731  \n 13,609,324  \n 15,782,938 \n\n  \n  \n    \n    \n   \n\nLoss from operations \n  \n (775,231) \n (3,971,312) \n (2,642,167)\n\n  \n  \n    \n    \n   \n\nOther Income (Expense) \n  \n    \n    \n   \n\nOther income \n  \n 13,039  \n \n-\n  \n \n-\n \n\nOther income - related party \n  \n 134  \n \n-\n  \n \n-\n \n\nInterest income \n  \n 3,457  \n 63,118  \n 444 \n\nInterest expense \n  \n (586,713) \n (198,580) \n (287,281)\n\nInterest expense - related party \n  \n (81,320) \n (183,777) \n (118,750)\n\nRecovery of bad debts \n4 \n 57,536  \n \n-\n  \n \n-\n \n\nLoss from disposal of equipment \n8 \n (42,761) \n \n-\n  \n \n-\n \n\nGain from insurance recoveries on inventory \n  \n \n-\n  \n 1,937,819  \n \n-\n \n\nImpairment on inventory due to natural disaster \n  \n \n-\n  \n (2,133,385) \n \n-\n \n\nForeign exchange gain (loss) \n  \n (132,832) \n 4,516  \n (82,881)\n\nTotal Other Income (Expense) \n  \n (769,460) \n (510,289) \n (488,468)\n\n  \n  \n    \n    \n   \n\nNet Loss Before Income Tax \n  \n (1,544,691) \n (4,481,601) \n (3,130,635)\n\nIncome tax Expense (Recovery) \n  \n    \n    \n   \n\n- Current \n  \n \n-\n  \n \n-\n  \n (93,022)\n\n- Deferred \n  \n (388,382) \n (1,144,601) \n (1,023,826)\n\nNet Loss \n  \n€(1,156,309) \n€(3,337,000) \n€(2,013,788)\n\n  \n  \n    \n    \n   \n\nBasic and Diluted Net Loss per Ordinary Share \n  \n€(0.02) \n€(0.06) \n€(0.04)\n\nWeighted Average Number of Ordinary Shares Outstanding - Basic and Diluted \n  \n 55,085,700  \n 55,085,700  \n 51,469,262 \n\n \n\nThe accompanying notes are an integral part of\nthese consolidated financial statements.\n\n \n\nF-4\n\n \n\n** **\n\n**TURBO ENERGY, S.A.**\n\n**Consolidated Statements of Changes in Shareholders’\nEquity**\n\n**(Expressed in Euro)**\n\n \n\n  \n  \nNumber of  \n   \nAdditional  \n   \n   \nTotal \n\n  \n  \nOutstanding  \nShare  \nPaid In  \n   \nAccumulated  \nShareholders’ \n\n  \nNote \nShares  \nCapital  \nCapital  \nReserve  \nDeficit  \nEquity \n\nBalance, December 31, 2022 \n  \n 50,085,700  \n 2,504,285  \n \n-\n  \n 383,268  \n 1,028,578  \n   3,916,131 \n\n  \n  \n    \n    \n    \n    \n    \n   \n\nIssuance of common stock from initial public offering for cash \n13 \n 5,000,000  \n 250,000  \n 3,104,781  \n \n-\n  \n \n-\n  \n 3,354,781 \n\nTransfer from retained earnings to reserve \n14 \n -  \n \n-\n  \n \n-\n  \n 1,028,578  \n (1,028,578) \n \n-\n \n\nNet loss for the year \n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n (2,013,788) \n (2,013,788)\n\nBalance, December 31, 2023 \n  \n 55,085,700  \n€2,754,285  \n€3,104,781  \n€1,411,846  \n€(2,013,788) \n€5,257,124 \n\n  \n  \n    \n    \n    \n    \n    \n   \n\nStock based compensation \n2 \n -  \n \n-\n  \n 103,810  \n \n-\n  \n \n-\n  \n 103,810 \n\nConversion from related party loan to capital contribution \n11 \n -  \n \n-\n  \n 600,000  \n \n-\n  \n \n-\n  \n 600,000 \n\nNet loss for the period \n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n (3,337,000) \n (3,337,000)\n\nBalance, December 31, 2024 \n  \n 55,085,700  \n€2,754,285  \n€3,808,591  \n€1,411,846  \n€(5,350,788) \n€2,623,934 \n\n  \n  \n    \n    \n    \n    \n    \n   \n\nStock based compensation \n2 \n -  \n \n-\n  \n 132,015  \n \n-\n  \n \n-\n  \n 132,015 \n\nNet loss for the period \n  \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n (1,156,309) \n (1,156,309)\n\nBalance, December 31, 2025 \n  \n 55,085,700  \n€2,754,285  \n€3,940,606  \n€1,411,846  \n€(6,507,097) \n€1,599,640 \n\n \n\nThe accompanying notes are\nan integral part of these consolidated financial statements.\n\n \n\nF-5\n\n \n\n \n\n**TURBO ENERGY, S.A.**\n\n**Consolidated Statements of Cash Flows**\n\n**(Expressed in Euro)**\n\n** **\n\n  \n  \nYear ended December 31, \n\n  \nNote \n2025  \n2024  \n2023 \n\nCash Provided by (Used in) \n  \n   \n   \n  \n\n  \n  \n   \n   \n  \n\nOperating Activities \n  \n   \n   \n  \n\nNet loss before income tax \n  \n€(1,544,691) \n€(4,481,601) \n€(3,130,635)\n\nItems not affecting cash: \n  \n    \n    \n   \n\nStock based compensation \n2 \n 132,015  \n 103,810  \n \n-\n \n\nBad debt expense \n4 \n 13,214  \n 138,941  \n 84,394 \n\nRecovery of bad debts \n4 \n (57,536) \n \n-\n  \n \n-\n \n\nLoss from disposal of equipment \n4 \n 42,761  \n \n-\n  \n \n-\n \n\nDepreciation of property and equipment \n8 \n 24,883  \n 11,814  \n 19,424 \n\nAmortization of intangible assets \n9 \n 242,118  \n 49,684  \n 49,984 \n\nAmortization of right-of-use assets \n16 \n 45,162  \n 61,568  \n 58,524 \n\nAccretion of lease liabilities \n16 \n 3,028  \n 2,311  \n 2,177 \n\nGain on lease cancellation \n16 \n (446) \n \n-\n  \n \n-\n \n\nProvision for inventory reserves \n5 \n \n-\n  \n \n-\n  \n 312,563 \n\nGain from insurance recoveries on inventory \n5 \n \n-\n  \n (1,937,819) \n \n-\n \n\nImpairment on inventory due to natural disaster \n5 \n \n-\n  \n 2,133,385  \n \n-\n \n\nChanges in non-cash working capital items: \n  \n    \n    \n   \n\nInventories \n5 \n (1,492,362) \n 3,438,571  \n 4,207,694 \n\nAccounts receivable and other receivables \n4 \n 1,230,679  \n (843,993) \n 832,135 \n\nDeferred tax assets \n17 \n 159,621  \n 157,397  \n (518,080)\n\nDue from related parties \n11 \n (8,213,386) \n 1,359,809  \n (1,306,861)\n\nDue to related parties \n11 \n 64,958  \n (117,414) \n (117,718)\n\nPrepaid expense \n6 \n (2,622,693) \n 27,770  \n (312,548)\n\nAccounts payable and accrued liabilities \n10 \n 9,736,713  \n 867,259  \n (609,310)\n\nAccrued interest payable \n12 \n 340,810  \n 14,901  \n \n-\n \n\nDeferred tax liabilities \n18 \n (2,744) \n 556  \n 32,783 \n\nIncome tax payable \n17 \n \n-\n  \n \n-\n  \n 578,319 \n\nNet cash provided by (used in) operating activities \n  \n (1,897,896) \n 986,949  \n 182,845 \n\n  \n  \n    \n    \n   \n\nInvesting Activities \n  \n    \n    \n   \n\nShort-term investments \n7 \n \n-\n  \n 1,992,000  \n (2,044,050)\n\nProceeds from return of short-term investments \n7 \n 17,493  \n \n-\n  \n \n-\n \n\nPurchase of equipment \n8 \n (8,748) \n (126,592) \n (28,025)\n\nPurchase of intangible assets \n9 \n (631,294) \n (926,953) \n (516,684)\n\nNet cash provided by (used in) investing activities \n  \n (622,549) \n 938,455  \n (2,588,759)\n\n  \n  \n    \n    \n   \n\nFinancing Activities \n  \n    \n    \n   \n\nNet proceed from issuance of common stock through Initial public offering \n13 \n \n-\n  \n \n-\n  \n 3,354,781 \n\nProceeds from debt bond \n12 \n 1,667,638  \n 865,882  \n \n-\n \n\nRepayment of debt bond \n12 \n (219,463) \n \n-\n  \n \n-\n \n\nRepayment of bank loans \n13 \n (90,374) \n (237,480) \n (228,150)\n\nNet proceeds (repayment) from lines of credit \n13 \n 231,256  \n 617,532  \n (4,116,483)\n\nRepayment of lease liabilities \n16 \n (47,940) \n (63,996) \n (60,523)\n\nPayments to related parties \n11 \n (1,124,328) \n (2,142,353) \n (640,332)\n\nProceeds from related parties \n11 \n 212,160  \n 799,105  \n 4,214,567 \n\nNet cash provided by (used in) financing activities \n  \n 628,949  \n (161,310) \n 2,523,860 \n\n  \n  \n    \n    \n   \n\nNet change in cash and cash equivalent \n  \n (1,891,496) \n 1,764,094  \n 117,946 \n\nCash and cash equivalent - beginning of period \n  \n 2,384,625  \n 620,531  \n 502,585 \n\nCash and cash equivalent - end of period \n  \n€493,129  \n€2,384,625  \n€620,531 \n\n** **\n\nThe accompanying notes are an integral part of\nthese consolidated financial statements.\n\n \n\nF-6\n\n \n\n \n\n**TURBO ENERGY, S.A.**\n\n**Notes to Consolidated Financial Statements**\n\n**December 31, 2025, 2024 and 2023**\n\n**(Expressed in Euro)**\n\n** **\n\n**NOTE 1 – ENTITY INFORMATION**\n\n \n\nTurbo Energy, S.A. (the “Company) was incorporated\nunder the name of Distritech Solutions S.L. on September 18, 2013 under the laws of the Kingdom of Spain. The Company then changed its\nname to Solar Rocket S.L. on October 7, 2013. On April 8, 2021, Solar Rocket S.L. merged with a Spanish corporation Turbo Energy S.L.U.\nTurbo Energy S.L.U then became a wholly owned subsidiary of Solar Rocket S.L. This merger was approved by the Board of Directors of both\ncompanies. Following the merger, the Company changed its name to Turbo Energy S.L. on April 8, 2021. On February 8, 2023, we transformed\nthe Company from a Spanish unipersonal limited company to a Spanish limited stock company. As such, our Company’s name was changed\nto Turbo Energy, S.A.\n\n** **\n\nThe corporate purpose of the Company, in accordance\nwith its bylaws, consists of the acquisition, distribution and sale of electrical and electronic material for the development of renewable\nenergy projects, such as solar panels, inverters, chargers, regulators, batteries and structures, among others. We design, develop and\ndistribute equipment for the generation, management and storage of photovoltaic energy. Our energy storage products are managed from\nthe cloud and through the inverter of the installation by an advanced software system which is optimized by artificial intelligence (“AI”).\nThe key advantage is that our products, when compared to conventional battery storage systems, reduce electricity costs and protect the\ninstallation from power outages. Historically, we have primarily sold inverters, batteries and photovoltaic modules to installers and\nother distributors for residential consumers located in Spain; however, since 2022, we have shifted our focus on developing and commercializing\nall-in-one, AI-optimized solar energy storage systems under the brand name *SUNBOX* with applications in the global residential\n(*SUNBOX Home* and *SUNBOX Home Lite*), commercial and industrial (*SUNBOX Industry*) and utility-scale (*SUNBOX Utility*)\nmarkets.\n\n \n\nThe Company is part of the Umbrella Global Energy,\nS.A., whose main shareholder is Crocodile Investment, S.L.U, (hereinafter, the ultimate partner), with registered office in Valencia.\nThe majority shareholder of the Turbo Energy, S.A is Umbrella Global Energy, S.A. (hereinafter, the majority shareholder), which is part\nof the Umbrella Global Energy Group.\n\n \n\nOn November 8, 2022, Turbo Energy S.A. with the\npurpose to develop a new business in the field of self-consumption of electricity, acquired 100% of the ordinary shares for a total amount\nof €2,250 of IM2 Energía Solar Proyecto 35 S.L.U., a company under common control by our CEO and established under the laws\nof the Kingdom of Spain on August 1, 2019. Following the transaction, IM2 Energía Solar Proyecto 35 S.L.U. became our wholly owned\nsubsidiary. On November 29, 2022, we changed its name to Turbo Energy Solutions S.L.U.\n\n \n\nOn September 21, 2023, Turbo Energy, S.A. entered\ninto an Underwriting Agreement with Titan Partners Group, a division of American Capital Partners, LLC, and Boustead Securities, LLC\nas the as the representative (“Representative”) of the underwriters named on Schedule 1 thereto, relating to the Company’s\nfirm commitment underwritten initial public offering (the “Offering”) of ADSs, each representing five ordinary shares of\nthe Company, par value five cents of euro per share, of the Company. Pursuant to the Underwriting Agreement, the Company agreed to sell\n1,000,000 ADSs to the underwriters at a public offering price of $5.00 per ADS (the “Offering Price”), before underwriting\ndiscounts and commissions, and granted the Representative a 45-day over-allotment option to purchase up to an additional 150,000 ADSs,\nequivalent to 15% of the ADSs sold in the Offering, at the Offering Price per ADS, pursuant to the Company’s registration statement\non Form F-1, as amended (File No. 333-273198), that was filed with the SEC and became effective on September 21, 2023, under the Securities\nAct of 1933, as amended (the “Securities Act”). The Offering was closed on September 26, 2023.\n\n \n\nOn September 6, 2024 Turbo Energy established\na 50%-owned subsidiary in Chile for the development of storage solutions and Energy as a services (EaaS) model products and services.\n\n**  **\n\n**Merger by absorption process**\n\n** **\n\nOn April 8, 2021, the merger of Solar Rocket,\nS.L. (“Absorbing Company”) and Turbo Energy, S.L.U. (“Absorbed Company”) was formalized in a public deed, being\nregistered in the Mercantile Registry of Valencia on August 9, 2021. The merger process, approved by the respective shareholders’\nmeetings on June 30, 2020, consisted of the extinction without liquidation of the Absorbed Company, transferring its assets and liabilities\nen bloc to the Absorbing Company, which acquired, by universal succession, the rights and obligations of the Absorbed Company. The Company\nrecorded the assets and liabilities contributed by the Absorbed company at the values established in the accounting regulations in force\nat that time. The consolidated financial statements for the year 2021 include the information required by the regulations in relation\nto the aforementioned merger process.\n\n \n\nOn the same date of the merger described above,\nthe Absorbing Company (Solar Rocket, S.L.) changed its corporate name to Turbo Energy, S.L.U., as described above.\n\n \n\nF-7\n\n \n\n \n\n**NOTE 2 – MATERIAL ACCOUNTING POLICIES**\n\n** **\n\n**Statement of compliance**\n\n \n\nThe consolidated financial statements of\nTurbo Energy, S.A. have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and interpretations\nissued by the IFRS Interpretations Committee (“IFRS IC”) applicable to companies reporting under IFRS. The consolidated financial\nstatements comply with IFRS as issued by the International Accounting Standards Board (“IASB”).\n\n \n\nThese consolidated financial statements were\napproved by the Board of Directors of the Company on May 12th, 2026.\n\n** **\n\n**Basis of presentation**\n\n \n\nThe consolidated financial statements of the\nCompany were prepared on a historical cost basis except where certain financial instruments are required to be measured at fair value.\nThese consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.\n\n** **\n\nThe consolidated financial statements are presented\nin Euro, which is the Company’s functional currency. Transactions in currencies other than the functional currency are recorded\nin accordance with the policies stated under Foreign Currency Transaction in Note 2.\n\n  \n\n**Reclassification**\n\n   \n\nCertain amounts from prior period have been reclassified\nto conform to the current period presentation. These reclassifications had no impact on reported operating and net loss.\n\n \n\n**Revenue recognition**\n\n \n\nThe Company designs, develops, and distributes\nequipment for the generation, management and storage of photovoltaic energy. Our energy storage products are managed from the cloud and\nthrough the inverter of the installation by an advanced software system which is optimized by artificial intelligence (“AI”).\nThe key advantage is that our products, when compared to conventional battery storage systems, reduce electricity costs and protect the\ninstallation from power outages.\n\n \n\nHistorically, the Company’s revenue has\nbeen primarily generated from sales of inverters, batteries, and photovoltaic modules to installers and other distributors for residential\nconsumers under individual customer purchase orders, some of which have underlying master sales agreements that specify terms governing\nthe product sales. However, since 2022, we have shifted our focus on developing and commercializing all-in-one, AI-optimized solar energy\nstorage systems under the brand name *SUNBOX* with applications in the global residential (*SUNBOX Home* and *SUNBOX Home\nLite*), commercial and industrial (*SUNBOX Industry*) and utility-scale (*SUNBOX Utility*) markets.\n\n  \n\nThe Company recognizes such revenue at the point\nin time when control of the products is transferred to the customer at the estimated net consideration for which collection is probable,\ntaking into account the customer’s rights to unit rebates, and rights to return unsold product. This applies to sales to both non-affiliates\nand related parties.\n\n \n\nTransfer of control occurs either when products\nare shipped to or received by the distributor or direct customer, based on the terms of the specific agreement with the customer, if\nthe Company has a present right to payment and transfer of legal title and the risks and rewards of ownership to the customer has occurred.\nFor most of the Company’s product sales, transfer of control occurs upon shipment to the distributor or direct customer. In assessing\nwhether collection of consideration from a customer is probable, the Company considers the customer’s ability and intention to\npay that amount of consideration when it is due. Payment of invoices is due as specified in the underlying customer agreement, typically 30 to\n60 days from the invoice date, which occurs on the date of transfer of control of the products to the customer.\n\n \n\nSince payment terms are less than a year, the\nCompany has elected the practical expedient and does not assess whether a customer contract has a significant financing component.\n\n \n\nF-8\n\n \n\n \n\nA five-step approach is applied in the recognition\nof revenue: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction\nprice, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when the Company\nsatisfies a performance obligation. Customer purchase orders plus the underlying master sales agreements are considered to be contracts\nwith the customer for purposes of applying the five-step approach.\n\n \n\nReturns under the Company’s general assurance\nwarranty of products have not been material historically and warranty-related services are not considered a separate performance obligation\nunder the customer orders.\n\n \n\nEach distinct promise to transfer products is\nconsidered to be an identified performance obligation for which revenue is recognized upon transfer of control of the products to the\ncustomer. The Company has also elected to record sales commissions when incurred, as the period over which the sales commission asset\nwould have been recognized is less than one year.\n\n** **\n\n**Concentration of Revenue by Customer**\n\n** **\n\nFor the year ended December 31, 2025, there was\none customer who comprised greater than 10% of the Company’s revenue which represented 49% of the Company’s revenue.\n\n \n\nFor the year ended December 31, 2024, there were\ntwo customers who comprised greater than 10% of the Company’s revenue which represented 12% of the Company’s revenue.\n\n \n\nFor the year ended December 31, 2023, there were\nno customers comprised greater than 10% of the Company’s revenue.\n\n \n\n**Cash and Cash Equivalents**\n\n** **\n\nCash consists of highly liquid instruments purchased\nwith an original maturity of three months or less. As of December 31, 2025 and 2024, the Company had cash of €493,129 and €2,384,625,\nrespectively. As of December 31, 2025 and 2024, the Company had cash equivalents of €0 and €1,000,000 for short-term investment\nwith three-months maturity.\n\n \n\nThe Company minimizes the concentration of credit\nrisk associated with its cash by maintaining its cash with high-quality insured financial institutions. However, cash balances in excess\nof the Spanish government insured limit (Fondo de Garantía de Depósitos (FDG)) of €100,000 are at risk.\n\n \n\n**Accounts Receivable**\n\n** **\n\nAccounts receivable are recorded at the invoiced\namount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit\nlosses in its existing accounts receivable.\n\n \n\nThe Company will run credit checks on all customers\nthat request term payment.\n\n \n\nUnder receivable factoring arrangements, the\nCompany sells certain accounts receivable with recourse, in order to accelerate the receipt of cash. Because the Company is still at\nrisk of credit losses, the receivables are not derecognized, and any proceeds received are recorded as financial liabilities.\n\n \n\n**Factor liability**\n\n \n\nDuring October 2025, the Company was party\nto a purchase and sale agreement with an unrelated lender (the “Factor”) whereby the Factor purchase certain accounts\nreceivable for a purchase price of up to 80% of the face amount, which is paid to the Company in the form of a cash advance. A\ncommission charge of 0.35% and annual interest of EURIBOR + 3.45% applied. Under the factoring arrangement, the Company must buy\nback any invoices that the Factor is unable to collect payment on. Accordingly, pursuant to IFRS 9, the Company recognizes a\nfactoring liability to the lender until the accounts receivables are collected. As of December 31, 2025 and 2024, the factoring\nliability was €128,233 and €0 recorded under accounts payable and accrued liabilities in the balance sheet, respectively.\nFor the years ended December 31, 2025 and 2024, the costs incurred by the Company in connection with factoring activities\nwere €14,579 and €0, respectively. \n\n \n\nF-9\n\n \n\n \n\n**Inventories**\n\n \n\nInventories are valued at their acquisition cost,\nproduction cost or net realizable value, whichever is lower. Discounts for prompt payment are included as a lower price, whether or not\nthey appear on the invoice and assigning value to its inventories. The Company adopts the weighted average price method.\n\n \n\nNet realizable value represents the estimated\nsales price less all estimated costs that will be incurred in the process of commercialization, sales and distribution.\n\n \n\nThe Company makes the appropriate valuation adjustments,\nrecording impairment expense when the net realizable value of the inventories is less than their acquisition cost.\n\n \n\n**Property and equipment**\n\n \n\nProperty and equipment is recognized and subsequently\nmeasured at cost less accumulated depreciation and any accumulated impairment losses, if any. When components of property and equipment\nhave different useful lives they are accounted for separately. Depreciation is provided at rates which are calculated to write off the\nassets over their estimated useful lives as follows:\n\n \n\nFurniture   10 years straight line\n\nTools and machinery   4 years straight line\n\nRight-of-use assets   Over term of the lease\n\n \n\n**Intangible assets**\n\n \n\nAcquired intangible assets are initially measured\nat cost. Following the initial recognition, intangible assets are measured at cost less any accumulated amortization and any impairment\nlosses. The useful lives of intangible assets are either definite or indefinite. Intangible assets that have a finite useful life are\namortized over the assessed useful economic life and are assessed for impairment when there are any indicators present that the intangible\nasset may be impaired. The Company reviews the amortization period and method at least annually, and any changes are treated as changes\nin accounting estimates and applied prospectively.\n\n \n\nComputer applications and webpages are amortized\nover estimated useful lives of three years and Software is amortized over estimated useful lives of five years.\n\n \n\n**Leases**\n\n** **\n\nThe determination of whether an arrangement is,\nor contains, a lease is based on the substance of the agreement on the inception date.\n\n \n\nAs a lessee, the Company recognizes a lease obligation\nand a right-of-use asset in the statements of financial position on a present-value basis at the date when the leased asset is available\nfor use. Each lease payment is apportioned between a finance charge and a reduction of the lease obligation. Finance charges are recognized\nin finance cost in the statements of income and comprehensive income. The right of-use assets are depreciated over the shorter of its\nestimated useful life and the lease term on a straight-line basis.\n\n  \n\nLease obligations are initially measured at the\nnet present value of the following lease payments:\n\n \n\n \n●\nfixed\npayments (including in-substance fixed payments), less any lease incentives;\n\n \n\n \n●\nvariable\nlease payment that are based on an index or a rate;\n\n \n\n \n●\namounts\nexpected to be payable under residual value guarantees;\n\n \n\n \n●\nthe exercise\nprice of a purchase option if the Company is reasonably certain to exercise that option; and\n\n \n\n \n●\npayments\nof penalties for terminating the lease, if the lease term reflects the Company exercising that option.\n\n  \n\nF-10\n\n \n\n \n\nLease payments are discounted using the interest\nrate implicit in the lease, or if this rate cannot be determined, the Company’s incremental borrowing rate. Right-of-use assets\nare initially measured at cost comprising the following:\n\n \n\n \n●\nthe amount\nof the initial measurement of the lease obligation;\n\n \n\n \n●\nany lease\npayments made at or before the commencement date less any lease incentives received; and\n\n \n\n \n●\nany initial\ndirect costs and rehabilitation costs.\n\n \n\nPayments associated with short-term leases and\nleases of low-value assets are recognized on a straight-line basis as an expense in the statements of income and comprehensive income.\nShort-term leases are leases with a lease term of 12 months or less.\n\n  \n\n**Share capital**\n\n \n\nOrdinary shares are classified as equity, net\nof transaction costs directly attributable to the issue of ordinary shares.\n\n \n\nOrdinary shares issued for consideration other\nthan cash are based on their market value at the date the ordinary shares are issued.\n\n \n\n**Restricted Stock Units**\n\n** **\n\nThe 2023 Equity Incentive Plan (the “Plan”)\nadministrator may award restricted stock units which represent the right to receive common stock at a future date in accordance with\nthe terms of such grant upon the attainment of certain conditions specified by the Plan administrator. Restrictions or conditions could\ninclude, but are not limited to, the attainment of performance goals, continuous service with the Company or its subsidiaries, the passage\nof time or other restrictions or conditions. The Plan administrator determines the persons to whom grants of restricted stock units are\nmade, the number of restricted stock units to be awarded, the time or times within which awards of restricted stock units may be subject\nto forfeiture, the vesting schedule, and rights to acceleration thereof, and all other terms and conditions of the restricted stock unit\nawards. The value of the restricted stock units may be paid in common stock, cash, other securities, other property, or a combination\nof the foregoing, as determined by the Plan administrator.\n\n \n\n**Share-Based Compensation**\n\n \n\nThe Company accounts for share-based compensation\nunder the fair value method in accordance with IFRS 2, “Share-based Payment,” which requires all such compensation to employees\nand non-employees to be calculated based on its fair value of the equity instrument at the grant date and recognized in the earnings\nover the requisite service or vesting period. (See Note 14)\n\n \n\n**Liquidity**\n\n \n\nThe Company has incurred a net loss of €1,156,309\nduring the year ended December 31, 2025.\n\n \n\nThe Company finds itself in a sector where many\nindustry research studies and forecasts have projected large exponential growth in the coming years. Turbo Energy is a consolidated company\nwith more than 10 years of proven experience. In the past three years, we have been making significant investments in research and development\nto help ensure that we are well positioned to present the markets we serve with highly differentiated value propositions when compared\nto other companies operating in the solar energy storage sector. To that end, our R&D investments have yielded the commercialization\nof proprietary, patented and patent pending hardware offerings, which include our line of all-in-one *SUNBOX* solar energy storage\nsolutions designed for residential, commercial and industrial and utility-scale applications. In addition, we have pioneered leading\nedge software solutions, which incorporate our advanced AI-powered capabilities for energy management and optimization.\n\n \n\nThe Company’s existing cash resources are\nexpected to provide sufficient funds to carry out the Company’s planned operations and expansion plan for more than 12 months.\nAlso, the Company is part of the Umbrella Global Energy Group, where its principal Company, the majority shareholder of Turbo Energy,\nhas explicitly expressed its full support to carry out its operational development, in the event such support is needed.\n\n \n\nAdditionally, after December 31 and prior to the\npreparation of these financial statements, as described in Note 23, the Company carried out several fundraising transactions in the U.S.\nmarket through the issuance of ordinary shares represented by American Depositary Securities (ADSs), using placement structures commonly\nused in that market, including a Registered Direct Offering (RDO) and subsequent placements under an “at-the-market” (ATM)\nprogram. Overall, these transactions resulted in the issuance of approximately 7.8 million shares, equivalent to approximately 1.56 million\nADSs, for total gross proceeds of approximately USD 5.0 million.\n\n** **\n\nF-11\n\n \n\n** **\n\n**Provisions**\n\n \n\nProvisions are recognized when there is a present\nlegal or constructive obligation as a result of a past event, for which it is probable that a transfer of economic benefits will be required\nto settle the obligation, and where a reliable estimate can be made of the amount of the obligation. Provisions are discounted using\na pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability,\nif material. Where discounting is used, the increase in the provision due to passage of time (“accretion expense”) is recognized\nas an expense on the statements of income and comprehensive income.\n\n \n\n**Income taxes**\n\n \n\nIncome tax expense comprises current and deferred\ntax. Deferred tax is recognized in the statements of income and comprehensive income except to the extent that they relate to items recognized\ndirectly in equity or in other comprehensive income or loss.\n\n \n\nCurrent income tax is the expected tax payable\nor receivable in respect of the taxable income or loss for the period, using income tax rates enacted or substantively enacted at the\nreporting date, and any adjustments to tax payable in respect of previous periods.\n\n \n\nDeferred income taxes are calculated using the\nliability method on temporary differences between the carrying amounts of assets and liabilities and their related tax bases. However,\ndeferred tax is not provided on the initial recognition of goodwill or on the initial recognition of an asset or liability unless the\nrelated transaction is a business acquisition or affects tax or accounting profit. The deferred tax assets and liabilities have been\nmeasured using substantively enacted tax rates that will be in effect when the amounts are expected to settle. Deferred tax assets are\nonly recognized to the extent that it is probable that they will be able to be utilized against future taxable income. The assessment\nof the probability of future taxable income in which deferred tax assets can be utilized is based on the Company’s latest approved\nforecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or\ncredit. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be used without\na time limit, that deferred tax asset is usually recognized in full. The recognition of deferred tax assets that are subject to economic\nlimits or uncertainties are assessed individually by management based on the specific facts and circumstances.\n\n \n\nDeferred tax assets and liabilities are offset\nonly when the Company has a right and intention to offset current tax assets and liabilities from the same taxation authority. Changes\nin deferred tax assets or liabilities are recognized as a component of income or expense in the statements of income and comprehensive\nincome, except where they relate to items that are recognized in other comprehensive income or loss or directly in equity.\n\n \n\n**Foreign currency transactions**\n\n** **\n\nThe functional currency used by the Company is\nthe Euro. Consequently, operations in currencies other than the Euro are considered to be denominated in foreign currency and are recorded\nat the exchange rates in force on the dates of the operations.\n\n \n\nAt year-end, monetary assets and liabilities\ndenominated in foreign currency are converted by applying the exchange rate on the balance sheet date. The profits or losses revealed\nare charged directly to the profit and loss account for the year in which they occur. \n\n \n\nOn each balance sheet date, monetary assets and\nliabilities in foreign currency are converted at the rates in force on the closing date. Non-monetary items in foreign currency measured\nin terms of historical cost are converted at the exchange rate on the date of the transaction.\n\n \n\nThe exchange differences of the monetary items\nthat arise both when liquidating them and when converting them at the closing exchange rate, are recognized in the results of the year,\nexcept those that are part of the investment of a business abroad, which are recognized directly in equity net of taxes until the time\nof its disposal.\n\n \n\n**Income (Loss) per share**\n\n \n\nBasic income (loss) per share is calculated by\ndividing the income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding in the period.\nFor all periods presented, the income attributable to ordinary shareholders equals the reported income attributable to owners of the\nCompany.\n\n \n\nDiluted income per share is calculated by the\ntreasury stock method. Under the treasury stock method, the weighted average number of ordinary shares outstanding for the calculation\nof diluted income per share assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used\nto repurchase ordinary shares at the average market price during the period.\n\n  \n\nF-12\n\n \n\n \n\nFor the years ended December 31, 2025, 2024 and\n2023, restricted stock units were potentially instruments and were not included in the calculation of diluted loss per share as their\neffect would be antidilutive.\n\n \n\n  \nDecember 31,  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n(Shares)  \n(Shares)  \n(Shares) \n\nRestricted Stock Units \n 1,727,742  \n 1,780,328  \n \n-\n \n\n \n\n**Impairment of non-financial assets**\n\n \n\nAt the end of each reporting period, the Company\nreviews the carrying amounts of its non-financial assets to determine whether there is any indication that the carrying amount is not\nrecoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the\nimpairment loss (if any). Management assesses impairment of non-financial assets such as property and equipment and intangible assets.\nIn assessing impairment, management estimates the recoverable amount of each asset or cash generating unit (“CGU”) based\non expected future cash flows. The Company has applied judgment in its assessment of the appropriateness of the determination of CGU’s.\nWhen measuring expected future cash flows, management makes assumptions about future growth of profits which relate to future events\nand circumstances. Actual results could vary from these estimated future cash flows. Estimation uncertainty relates to assumptions about\nfuture operating results and the application of an appropriate discount rate.\n\n  \n\n**Financial instruments**\n\n** **\n\n**Financial assets**\n\n** **\n\nFinancial assets are classified as either financial\nassets at fair value through profit and loss (“FVTPL”), amortized cost, or fair value through other comprehensive income\n(“FVTOCI”). The Company determines the classification of its financial assets at initial recognition.\n\n \n\n**Classification and measurement**\n\n** **\n\nClassification determines how financial assets\nand financial liabilities are accounted for in financial statements and, in particular, how they are measured on an ongoing basis. IFRS\n9 *Financial Instruments *approach for the classification of financial assets is driven by cash flow characteristics and\nthe business model in which an asset is held. This single, principle-based approach replaces prior rule-based requirements. The model\nalso results in a single impairment model being applied to all financial instruments.\n\n  \n\nFinancial assets at FVTPL\n\n \n\nFinancial assets carried at FVTPL are initially\nrecorded at fair value and transaction costs are expensed in the statements of income and comprehensive income. Realized and unrealized\ngains and income arising from changes in the fair value of the financial asset held at FVTPL are included in the statements of income\nand comprehensive income in the period in which they arise. The Company has classified cash as FVTPL.\n\n \n\nFinancial assets at FVTOCI\n\n \n\nFinancial assets at FVTOCI are initially recognized\nat fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair\nvalue recognized in other comprehensive income. There is no subsequent reclassification of fair value gains and losses to profit or loss\nfollowing the derecognition of the investment. There are no financial assets classified as FVTOCI.\n\n \n\nFinancial assets at amortized cost\n\n \n\nFinancial assets at amortized cost are initially\nrecognized at fair value, net of transaction costs, and subsequently carried at amortized cost less any impairment. They are classified\nas current assets or non-current assets based on their maturity date. The Company has classified accounts receivable and amounts due\nfrom related parties at amortized cost.\n\n \n\nFinancial assets are derecognized when they mature\nor are sold, and substantially all the risks and rewards of ownership have been transferred.\n\n \n\nF-13\n\n \n\n \n\n**Financial liabilities**\n\n** **\n\nFinancial liabilities are classified as either\nfinancial liabilities at FVTPL or at amortized cost. The Company determines the classification of its financial liabilities at initial\nrecognition.\n\n \n\nFinancial liabilities are\nclassified as measured at amortized cost, net of transaction costs unless classified as FVTPL. The Company’s accounts payable and\naccrued liabilities, amounts due to related parties, lease liabilities and bank loans are classified as measured at amortized cost.\n\n \n\nThe Company’s bank loans were classified\nas measured at amortized cost at December 31, 2025 and 2024. During the years ended December 31, 2025, 2024 and 2023, the Company incurred\n€37,943, €153,128 and €245,706 of interest on bank loans and lines of credit, respectively.\n\n  \n\n**Fair value measurement**\n\n** **\n\nFair value measurements are made using a three-tier\nfair value hierarchy, which prioritizes the inputs used in measuring fair value:\n\n \n\n \n●\nLevel\n1 – defined as observable inputs such as quoted prices in active markets;\n\n \n\n \n●\nLevel\n2 – defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and\n\n \n\n \n●\nLevel\n3 – defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own\nassumptions.\n\n \n\nThe fair value measurement is categorized in\nits entirety by reference to its lowest level of significant input. Fair value is based on estimated cash flows, discounted at interest\nrates for similar instruments.\n\n \n\nThe carrying amounts shown of the Company’s\nfinancial instruments including cash, accounts receivable, inventories, accounts payable and accrued liabilities approximate their\nfair value (Level 1) due to the short-term maturities of these instruments.\n\n \n\n**Impairment of financial assets**\n\n** **\n\nThe Company assesses at each statement of financial\nposition date whether there is objective evidence that a financial asset or group of financial assets is impaired.\n\n \n\nThe Company recognizes expected credit losses\n(“ECL”) for accounts receivable based on the simplified approach. The simplified approach to the recognition of expected\nlosses does not require the Company to track the changes in credit risk; rather, the Company recognizes a loss allowance based on lifetime\nexpected credit losses at each reporting date from the date of the account receivable.\n\n \n\nThe Company measures expected credit loss by\nconsidering the risk of default over the contract period and incorporates forward-looking information into its measurement. ECLs are\na probability-weighted estimate of credit losses.\n\n \n\nECLs are measured as the difference in the present\nvalue of the contractual cash flows that are due to the Company under the contract, and the cash flows that the Company expects to receive.\nThe Company assesses all information available, including past due status, and forward looking macro- economic factors in the measurement\nof the ECLs associated with its assets carried at amortized cost.\n\n \n\nThe maximum period considered when estimating\nECLs is the maximum contractual period over which the Company is exposed to credit risk.\n\n \n\n**New Accounting Pronouncements**\n\n** **\n\nThe following accounting standards and amendments\nhave been issued by the IASB or the International Financial Reporting Interpretations Committee that are not yet effective as of the\ndate of the Company’s consolidated financial statements. The Company intends to adopt such standards upon the mandatory effective\ndate.\n\n \n\nF-14\n\n \n\n \n\n**Recently Adopted Accounting Standards**\n\n \n\n*Classification of Liabilities as Current or\nNon-current (Amendments to IAS 1)*\n\n \n\nThe amendments to IAS1 provide a more general\napproach to the classification of liabilities based on the contractual arrangements in place at the reporting date. These amendments\nare effective for reporting periods beginning on or after January 1, 2023. The adoption of the amendments to IAS1 has not had a material\neffect on the Company’s statements and disclosures.\n\n \n\n**NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING\nJUDGEMENTS, ESTIMATES AND ASSUMPTIONS**\n\n** **\n\nThe preparation of these consolidated financial\nstatements in accordance with IFRS requires management to make estimates and judgments that affect the recognition, measurement and disclosure\nof amounts reported in these consolidated financial statements and accompanying notes. The reported amounts and note disclosures are\ndetermined using management’s best estimates based on assumptions that reflect the most probable set of economic conditions and\nplanned courses of action. Actual results may differ from such estimates. These judgments, estimates and assumptions are reviewed regularly.\n\n \n\nThe following are significant management judgments,\nestimates and assumptions used in applying the accounting policies of the Company that have the most significant effect on recognition\nand measurement of assets, liabilities, income and expenses:\n\n \n\n**Leases**\n\n** **\n\nThe Company exercises judgment in determining\nthe approximate lease term on a lease-by-lease basis. The Company considers all facts and circumstances that may create an economic incentive\nto exercise renewal options and also evaluates the economic incentive related to the continuation of existing leaseholds. The Company\nis also required to estimate specific criteria in order to estimate the carrying amount of right-of-use assets and lease liabilities\nincluding the incremental borrowing rate and effective interest rate.\n\n** **\n\n**Valuation of accounts receivable**\n\n \n\nManagement monitors the financial stability of\nits customers and the environment in which they operate to make estimates regarding the likelihood that the individual trade balances\nwill be paid. Credit risks for outstanding customer receivables are regularly assessed and allowances are recorded for estimated losses,\nif required.\n\n \n\n**Valuation of inventories**\n\n \n\nManagement makes estimates of future customer\ndemand for products when establishing appropriate provisions for inventory obsolescence. In making these estimates, management considers\nthe age of inventory and profitability of recent sales.\n\n \n\n**Recoverability of income taxes**\n\n** **\n\nThe measurement and assessment of income tax\nassets and liabilities requires management to make judgments in the interpretation and application of the relevant tax laws and estimates\nof the Company’s abilities to utilize losses carried forward to offset taxes payable on future taxable income. The actual amount\nof income taxes only becomes final upon filing and acceptance of the tax return by the relevant tax authorities, which occurs subsequent\nto the issuance of the financial statements.\n\n \n\nF-15\n\n \n\n \n\n**Useful life of property and equipment**\n\n** **\n\nChanges in the intended use of property and equipment\nas well as changes in technology or economic conditions may cause the estimated useful life of these assets to change. The change in\nuseful lives could impact the depreciation expense and carrying value of property and equipment.\n\n* *\n\n**Useful life of intangible assets**\n\n** **\n\nChanges in the intended use of intangible assets\nwith determinable useful lives as well as changes in technology or economic conditions may cause the estimated useful life of these assets\nto change. The change in useful lives could impact the amortization expense and carrying value of intangible assets.\n\n \n\n**Terms and Conditions of Restricted Stock\nUnits**\n\n \n\nManagement determines the terms and conditions\nof Restricted Stock Units (‘RSU”), including the vesting criteria, the form and timing of payment, the time within which\nRSU may be subject to forfeiture and rights to acceleration thereof.\n\n \n\n**NOTE 4 – ACCOUNTS RECEIVABLE AND OTHER\nRECEIVABLES, NET**\n\n** **\n\nAccounts receivable and other receivables as of December 31, 2025\nand 2024 are summarized as below:\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nCustomers by sales provision of services \n€1,868,572  \n€3,360,994 \n\nVAT receivable \n 11,131  \n 41,242 \n\nOthers \n 34,960  \n 39,460 \n\n  \n€1,914,663  \n€3,441,696 \n\nAllowance for doubtful accounts \n (174,888) \n (515,564)\n\n  \n€1,739,775  \n€2,926,132 \n\n \n\nAs of December 31, 2025 and 2024, the allowance\nfor doubtful accounts was €174,888 and €515,564, respectively. During the years ended December 31, 2025, 2024 and 2023, the\nCompany recorded bad debt expense of €13,214, €138,941 and €84,394, respectively. During the year ended December 31, 2025,\nthe change in the allowance for doubtful accounts was due to the Company classified as definitive losses customers previously classified\nas doubtful in prior years for €353,890. As of December 31, 2025 and 2024, €283,457 and €0 trade receivable were under\nfactoring recourse arrangement, respectively.\n\n \n\n**NOTE 5 – INVENTORIES**\n\n** **\n\nAs of December 31, 2025 and 2024, the Company\nhad finished goods of €3,444,184 and €1,951,822, respectively. During the years ended December 31, 2025, 2024 and 2023, the\nCompany recorded a provision for slow moving inventory in the statements of operations of €0, €0 and €312,563, respectively,\nand recovery on provision on slow moving inventory in the statements of operations of €0, €402,908 and €312,563, respectively.\nDuring the years ended December 31, 2025, 2024 and 2023, the Company recorded reversal of impairment on inventory of €0, €452,269\nand €0, respectively. As of December 31, 2025 and 2024, there was a provision for obsolescence of €0 and €0, respectively.\n\n \n\nThe Company outsourced the management of inventories\nto a third party with all the inventories located in a warehouse owned by the third party. The Company pays a monthly fee to the warehouse\ncompany for insurance coverage of the inventories, as stated in the agreement between both parties.\n\n \n\nDuring the year ended December 31, 2024, due\nto the flash flooding event in Valencia on October 29, 2024, the Company suffered inventory damage in its warehouse, resulting in an\nimpairment loss on inventory of €2,133,385; but was able to recognize income from insurance coverage on damaged inventory of €1,937,819. \n\n \n\nF-16\n\n \n\n \n\n**NOTE 6 – PREPAID EXPENSE**\n\n \n\nPrepaid expense as of December 31, 2025 and 2024 are summarized as\nbelow:\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nAdvancement to suppliers for inventory \n€3,338,500  \n€771,863 \n\nAdvancement for PP&E under construction \n 11,683  \n 11,683 \n\nConference \n 100,976  \n \n-\n \n\nInsurance \n 188,983  \n 219,007 \n\nSecurity deposits and others \n 2,935  \n 17,831 \n\n  \n€3,643,077  \n€1,020,384 \n\n \n\n**NOTE 7 – INVESTMENTS**\n\n** **\n\nAs of December 31, 2025 and 2024, the Company\nhad short-term investment of €34,557 and €52,050, comprised of a short-term commercial deposit of €26,557 and €44,050\nwith an assembling vendor and a short-term commercial deposit with a sales company of €8,000 and €8,000, respectively. During\nthe year ended December 31, 2025, 2024 and 2023, the Company recognized interest income of €3,457, €63,118 and €444 from\nthe investments, respectively.\n\n** **\n\n**NOTE 8 – PROPERTY AND EQUIPMENT**\n\n \n\nProperty and equipment as of December 31, 2025\nand 2024 are summarized as follows:\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nFurniture \n€23,873  \n€65,118 \n\nLaboratory Photovoltaic Installation \n 238,057  \n 232,806 \n\nTools and Machinery \n 14,822  \n 7,838 \n\nComputer \n 10,689  \n 14,915 \n\n  \n 287,441  \n 320,677 \n\nAccumulated depreciation \n (72,475) \n (46,815)\n\n  \n€214,966  \n€273,862 \n\n \n\nDuring the years ended December 31, 2025, 2024\nand 2023, the Company acquired property and equipment of €8,748, €126,592 and €28,025, respectively. During the years ended\nDecember 31, 2025, 2024 and 2023, the Company disposed property and equipment of €63,496, €0 and €0, respectively. During\nthe years ended December 31, 2025, 2024 and 2023, the Company incurred loss from disposal of property and equipment of €42,761, €0\nand €0, respectively. During the years ended December 31, 2025, 2024 and 2023, the Company recorded depreciation expense of €24,883,\n€11,814 and €19,424 respectively.\n\n \n\nF-17\n\n \n\n \n\n**NOTE 9 – INTANGIBLE ASSETS**\n\n \n\nIntangible assets as of December 31, 2025 and 2024 are summarized\nas follows:\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nSoftware development \n€5,382  \n€1,563,923 \n\nSoftware SKN1 \n 248,419  \n 248,419 \n\nSoftware SKN2 \n 1,378,566  \n \n-\n \n\nComputer application \n 33,755  \n 33,755 \n\nResearch and Development Prototypes \n 811,269  \n \n-\n \n\nWeb page \n 6,010  \n 6,010 \n\n  \n 2,483,401  \n 1,852,107 \n\nAmortization \n (381,250) \n (139,132)\n\n  \n€2,102,151  \n€1,712,975 \n\n \n\nDuring the year ended December 31, 2025,\n2024 and 2023, the Company made additions to other intangible developments of €631,294, €926,953 and €516,684,\nrespectively. Other intangible developments refer to the development carried out by the company of the Sunbox energy storage system,\nthe SKN1 technology integrator software, which provides control, operational efficiency, and automated energy decision-making, and\nthe SKN2 technology creator software, designed to monitor, manage, and optimize solar installations with storage from a single\nplatform.\n\n \n\nDuring the first semester of 2025, Turbo Energy\nhad ready and already in use the new *Turbo Energy*software SKN2, as well as the first beta units already in use of the new *SUNBOX*energy storage solution developed for the U.S. market. Software development of €1,378,566 was transferred to Software SKN2 upon\ncompletion of the development.\n\n \n\nDuring the year ended December 31, 2025 and 2024,\nthe Company recorded amortization expense of €242,118, €49,684 and €49,984, respectively. The Company evaluated intangible\nassets for impairment for the year ended December 31, 2025 and determined that there are no impairment losses.   \n\n \n\n**NOTE 10 – ACCOUNTS PAYABLE AND ACCRUED LIABILITIES**\n\n \n\nAccounts payable and accrued labilities as of\nDecember 31, 2025 and 2024 are summarized as follows:\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nTrade payable \n€12,213,712  \n€2,024,811 \n\nFactoring \n 128,233  \n \n-\n \n\nVAT payable \n 132,746  \n 56,368 \n\nPayroll taxes payable \n 43,824  \n 56,899 \n\nCustomer deposits \n 121,015  \n 772,740 \n\nOthers \n 8,000  \n \n-\n \n\n  \n€12,647,530  \n€2,910,818 \n\n  \n\nF-18\n\n \n\n \n\n**NOTE 11 – RELATED PARTY TRANSACTIONS**\n\n \n\nAmount due from (to) as of December 31, 2025\nare summarized as follows:\n\n \n\nDue from related parties:\n\n \n\n  \nUltimate  \nSenior  \nOther group  \n  \n\n  \npartner  \npartner  \ncompanies  \nTotal \n\nCredits pending collection \n€\n        -\n  \n€\n        -\n  \n€35,118  \n€35,118 \n\nLong-term investment \n \n-\n  \n \n-\n  \n 291,810  \n 291,810 \n\nTrade receivables \n \n-\n  \n \n-\n  \n 10,116,959  \n 10,116,959 \n\nTotal \n€\n-\n  \n€\n-\n  \n€10,443,887  \n€10,443,887 \n\n \n\nDue to related parties: \n\n \n\n  \nUltimate  \nSenior  \nOther group  \n  \n\n  \npartner  \npartner  \ncompanies  \nTotal \n\nCredits pending to pay \n€\n-\n  \n€(1,020,746) \n€(822) \n€(1,021,568)\n\nAdvance Payment \n \n-\n  \n \n-\n  \n (1,840,395) \n (1,840,395)\n\nTrade payable \n \n-\n  \n (67,154) \n \n-\n  \n (67,154)\n\nTotal \n€\n-\n  \n€(1,087,900) \n€(1,841,217) \n€(2,929,117)\n\n \n\nAmount due from (to) as of December 31, 2024\nare summarized as follows:\n\n \n\nDue from related parties:\n\n \n\n  \nUltimate  \nSenior  \nOther group  \n  \n\n  \npartner  \npartner  \ncompanies  \nTotal \n\nCredits pending collection \n€\n-\n  \n€\n-\n  \n€16,908  \n€16,908 \n\nLong-term investment \n \n-\n  \n \n-\n  \n 112,725  \n 112,725 \n\nTrade receivables \n 250  \n \n-\n  \n 116,337  \n 116,587 \n\nTotal \n€250  \n€\n-\n  \n€245,970  \n€246,220 \n\n \n\nF-19\n\n \n\n \n\nDue to related parties: \n\n \n\n  \nUltimate  \nSenior  \nOther group  \n  \n\n  \npartner  \npartner  \ncompanies  \nTotal \n\nCredits pending to pay \n€\n-\n  \n€(1,900,000) \n€(784) \n€(1,900,784)\n\nCredits pending collection \n \n-\n  \n 164,380  \n \n-\n  \n 164,380 \n\nTrade payable \n \n-\n  \n (2,196) \n (53,445) \n (55,641)\n\nTotal \n€\n-\n  \n€(1,737,816) \n€(54,229) \n€(1,792,045)\n\n \n\nAll the amounts due to and from related parties\nare unsecured, non-interest bearing and due on demand, except for the loan agreement from Umbrella Global Energy, S.A. of €3,800,000.\nThis five-year loan was formalized and signed on June 30, 2023, with a market interest rate of 6.25% per year, payable bi-annually. During\nthe year ended December 31, 2025 and 2024, Turbo Energy received proceed from the loan of €180,000 and €0, respectively. During\nthe year ended December 31, 2025 and 2024, Turbo Energy repaid €903,733 and €1,300,000, respectively. Also, during the year\nended December 31, 2024, €600,000 of the loan was converted to partner contribution. As of December 31, 2025 and December 31, 2024,\nthe loan amount was €1,176,267 and €1,900,000, respectively. During the year ended December 31, 2025, 2024 and 2023, a total\namount of €81,320, €183,777 and €118,750 had been paid for interest, respectively.\n\n \n\nTransactions with related parties during the years\nended December 31, 2025, 2024 and 2023 were summarized as follows:\n\n \n\nYear Ended December 31, 2025\n\n \n\n  \nUltimate  \nSenior  \nOther group  \n  \n\n  \npartner  \npartner  \ncompanies  \nTotal \n\nSales \n€\n-\n  \n€\n-\n  \n€10,524,288  \n€10,524,288 \n\n*Services received \n \n-\n  \n (582,440) \n \n-\n  \n (582,440)\n\nTotal \n€\n-\n  \n€(582,440) \n€10,524,288  \n€9,941,848 \n\n \n\n*Comprised of selling and administrative – related parties\nof €360,787, salaries and benefits – related parties of €140,333 (including stock-based compensation of €132,015\nfrom RSU) and interest expense – related parties of €81,320.\n\n \n\nYear Ended December 31, 2024 \n\n \n\n  \nUltimate  \nSenior  \nOther group  \n  \n\n  \npartner  \npartner  \ncompanies  \nTotal \n\nSales \n€742  \n€\n-\n  \n€305,909  \n€306,651 \n\n*Services received \n \n-\n  \n (1,133,890) \n \n-\n  \n (1,133,890)\n\nTotal \n€742  \n€(1,133,890) \n€305,909  \n€(827,239)\n\n \n\n* Comprised of selling and administrative – related parties of €848,832, salaries and benefits – related parties of €101,281 (including stock-based compensation of €88,248) and interest expense – related parties of €183,777.\n\n \n\nF-20\n\n \n\n \n\nYear Ended December 31, 2023\n\n \n\n  \nUltimate  \nSenior  \nOther group  \n  \n\n  \npartner  \npartner  \ncompanies  \nTotal \n\nSales \n€28,419  \n€2,418  \n€1,349,710  \n€1,380,547 \n\n*Services received \n \n-\n  \n (1,139,518) \n \n-\n  \n (1,139,518)\n\nPurchases \n \n-\n  \n \n-\n  \n (1,201,244) \n (1,201,244)\n\nTotal \n€28,419  \n€(1,137,100) \n€148,466  \n€(960,215)\n\n \n\n  * Comprised of selling and administrative – related parties of €1,010,769, salaries and benefits – related parties of €9,999 and interest expense – related parties of €118,750.\n\n \n\nOur related party transactions during the fiscal\nyear ended December 31, 2025 include sales of products or services made to or purchases of products or services from affiliated group\ncompanies that are under common control and to associates of such group companies. These transactions include income accrued from the\ncommercial activities of our Company. The purchases relate to merchandise that we sell in its normal course of commercial operations.\n\n \n\nDuring the year ended December 31, 2025, 2024\nand 2023, the Company made payment to the related parties of €1,124,328, €2,142,353 and €640,332, respectively. During\nthe year ended December 31, 2025, 2024 and 2023, the Company received advancement from related parties of €212,160, €799,105\nand €4,214,567, respectively.\n\nUmbrella Global Energy, as the holding company\nof the group, assumes all structural costs such as those related to human resources, licenses, legal, tax, labor, marketing and other\ngeneric structural costs. A margin of 13% is applied to these costs and the resulting amount is distributed to the four most significant\ncompanies in the group based on their estimated revenue in the monthly management fees.\n\n \n\nDuring the years ended December 31, 2025,\n2024 and 2023, the Company incurred management fees to Umbrella Global Energy, S.A. of €350,372, €840,000 and €1,005,434,\nrespectively.\n\n \n\nNo compensation has been paid to the executives\nunder Crocodile Investment SLU. The Company expects to continue with the same allocation structure in the future.\n\n \n\n**NOTE 12 – DEBT BOND**\n\n \n\nOn\nAugust 26, 2024, the Company entered into an agreement with Enerfip, a leading France-based crowdfunding platform dedicated to renewable\nenergy projects and regulated by The French Financial Markets Authority and Prudential Control and Resolution Authority (the “Enerfip\nAgreement”). Pursuant to the Enerfip Agreement, the Company closed on subscriptions by European individual investors, raising total\ngross proceeds of €2,533,520 (approximately US$1,647,637) through a 36-month simple debt bond with an interest rate of 8.75%. During\nthe year ended December 31, 2025 and 2024, the Company received proceed from debt bond of €1,667,638 and €865,882 and made repayment\nof debt bond of €219,463 and €0, respectively. As of December\n31, 2025 and December 31, 2024, the debt bond was $2,314,057 and 865,882, respectively.\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nDebt bond \n€2,314,057  \n€865,882 \n\nless: current portion \n (253,352) \n (91,411)\n\n  \n€2,060,705  \n€774,471 \n\n \n\nDuring the years ended December 31, 2025, 2024\nand 2023, interest expense totaled €196,349, €14,901 and €0, respectively. As of December 31, 2025 and 2024, the accrued\ninterest was €36,653 and €14,901, respectively.\n\n \n\nF-21\n\n \n\n \n\n**NOTE 13 – BANK LOANS**\n\n** **\n\nBank loans as of December 31, 2025 and 2024\nare summarized as follows:\n\n \n\nBank loans \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nBank loans \n€382  \n€90,756 \n\nLines of credit \n 4,510,449  \n 4,279,193 \n\n  \n 4,510,831  \n 4,369,949 \n\nless: current portion \n (4,510,831) \n (4,369,949)\n\n  \n€\n-\n  \n€\n-\n \n\n \n\nThe terms and conditions of outstanding bank loans\nare as follows:\n\n \n\n      Nominal       December 31, 2025   December 31, 2024 \n\n      interest   Year of   Face   Carrying   Face   Carrying \n\nBank Loans  Currency  rate   maturity   Value   Amount   Value   Amount \n\nCaixaBank  EUR   1.50%  2025    400,000    382    400,000    34,638 \n\nAbanca  EUR   1.87%  2025    100,000    \n-\n    100,000    12,886 \n\nBanco de Sabadell SA  EUR   1.50%  2025    250,000    \n-\n    250,000    21,411 \n\nUnicaja  EUR   1.55%  2025    170,000    \n-\n    170,000    21,821 \n\n               €920,000   €382   €920,000   €90,756 \n\n \n\nDuring the years ended December 31, 2025,\n2024 and 2023, the Company incurred bank loan interest expense of €336, €5,367 and €12,618, respectively.\n\n \n\nThe Company’s obligations are secured by\nsubstantially all of the assets of the Company.\n\n \n\nPrincipal repayments to maturity by fiscal year\nare as follows:\n\n \n\nYear ended December 31, \n  \n\n2025 \n€382 \n\nTotal \n€382 \n\n \n\nF-22\n\n \n\n \n\nIn addition, the Company maintains the following\nlines of credit:\n\n \n\nAs of December 31, 2025\n\n \n\n             December 31, \n\n       Nominal     2025 \n\n   Credit   interest     Carrying \n\nLine of credit  Limit   rate  Maturity  Value \n\nCaixabank  €2,500,000   0.60% + Euribor  3/25/2025  €2,314,026 \n\nSabadell   2,400,000   1.20% + Euribor  2/28/2025   \n-\n \n\nBBVA   1,570,000   1.90% + Euribor  12/22/2025   1,292,690 \n\nSantander   4,000,000   0.45% + Euribor  2/28/2025   \n-\n \n\nBankinter   2,690,000   0.90% + Euribor  3/20/2025   903,733 \n\nBankinter   110,000   0.75% + Euribor  3/20/2025   \n-\n \n\n   €13,270,000         €4,510,449 \n\n \n\nIn February 2026, all these line of credit were\nrefinanced on a long-term basis with the aforementioned financial institutions.\n\n \n\nAs of December 31, 2024 \n\n \n\n             December 31, \n\n       Nominal     2024 \n\n   Credit   interest     Carrying \n\nLine of credit  Limit   rate  Maturity  Value \n\nCaixabank  €2,500,000   0.60% + Euribor  3/25/2025  €2,455,013 \n\nSabadell   2,400,000   1.20% + Euribor  2/28/2025   196,576 \n\nBBVA   1,570,000   1.90% + Euribor  12/22/2025   992,712 \n\nSantander   4,000,000   0.45% + Euribor  2/28/2025   30,720 \n\nBankinter   2,690,000   0.90% + Euribor  3/20/2025   494,172 \n\nBankinter   110,000   0.75% + Euribor  3/20/2025   110,000 \n\n   €13,270,000         €4,279,193 \n\n \n\nThe Company has €3.6 million facility that\nis unsecured and can be drawn down to meet short-term financing needs. The facility has a maturity of one to three years for the ICO credit\nlines that renews automatically at the option of the Company. Interest is payable at an average rate of Euribor plus 2.11 basis points.\nDuring the years ended December 31, 2025, 2024 and 2023, the Company incurred interest expense from line of credit of €37,606,\n€147,761 and €133,977, respectively.\n\n \n\nF-23\n\n \n\n \n\n**NOTE 14 – SHARE CAPITAL**\n\n** **\n\n**Authorized**\n\n \n\nThe Company has authorized 75,085,700 ordinary shares with a par value\nof €0.05.\n\n \n\n**Issuances**\n\n** **\n\nOn September 22, 2023, the Company announced its\ninitial public offering of 1,000,000 American Depositary Shares (“ADSs”), representing 5,000,000 ordinary shares, at a price\nof $5.00 per ADS to the public for a total of $5,000,000 of gross proceeds to the Company, before deducting underwriting discounts and\noffering expenses (the “Offering”). In connection with the Offering, the American Depositary Shares began trading on the Nasdaq\nCapital Market under the symbol “TURB.” During December 2023, the Company issued 5,000,000 ordinary shares from the initial\npublic offering for proceeds of €3,354,781, net of share offering costs and underwriting cost of €1,350,200.\n\n \n\nDuring December 2022, we issued 50,000,000 ordinary\nshares (pre-stock split: 2,500,000 shares) for proceeds of €2,500,000, to our parent company, who was also our sole shareholder at\nthat time.\n\n \n\nThe Company has reflected the issuance of ordinary\nshares for all periods presented due to their nominal value, relative to the Offering. The Company accounted for the proceeds as share\ncapital in the year ended December 31, 2022. Earnings per share and ordinary shares outstanding have been retroactively reflected\nto show this issuance from the earliest period reported.\n\n \n\n**Stock Split**\n\n \n\nIn February 2023, the Company effected a forward\nstock split of the issued and outstanding ordinary shares on a 20-for-1 basis. We increased our issued and outstanding share capital from\n2,504,285 ordinary shares to 50,085,700 ordinary shares. The Commercial Registry of Valencia approved the forward stock split on February\n1, 2023. The consolidated financial statements retrospectively reflected the forward stock split.\n\n \n\n**Issued and outstanding**\n\n \n\nAs of December 31, 2025 and 2024, the total\nissued and outstanding share capital consisted of 55,085,700 ordinary shares at €2,754,285, all subscribed and paid up.\n\n \n\n**Restricted Stock Units**\n\n \n\nOn April 5, 2024, the Compensation Committee and\nthe Board of Directors of the Company approved the grant of 1,780,328 Restricted Share Units (RSUs) which can be converted into 356,067\nAmerican Depositary Shares (“ADS”) of the Company, representing 1,780,328 Ordinary Shares of the Company, to certain officers,\ndirectors and employees of the Company with a vesting date of January 1, 2027.\n\n \n\nDuring the year ended December 31, 2025 and 2024,\nthe Company recorded €132,015 and €103,810 in stock-based compensation expense, respectively. The stock-based compensation incurred\nfrom RSUs awarded was reported under salaries and benefits – related parties in the statements of operations with share-based payment\nreserve of €0 and €88,247 recognized under reserve in the balance sheets, respectively.\n\n \n\nDuring the year ended December 31, 2025, 52,586\nRSUs valued at €11,315 were forfeited.\n\n \n\nThe 1,780,328 RSUs were valued at €383,064\nbased on the price of the Company’s ADS which was €1.08 per ADS on the grant date of April 5, 2024.\n\n \n\nAs of December 31, 2025 and December 31, 2024,\nthe Company had 1,727,742 RSUs valued at €371,749 and 1,780,328 RSUs valued at €383,064, respectively.  \n\n \n\nF-24\n\n \n\n \n\nA summary of activity regarding the RSUs issued\nwas as follows:\n\n \n\n  \n   \nWeighted\n\nAverage \n\n  \nNumber of   \nGrant Date\n\nFair Value \n\n  \nUnits  \nPer Share \n\nBalance, December 31, 2023 \n \n-\n  \n€\n-\n \n\nGranted \n 1,780,328  \n 0.22 \n\nVested \n \n-\n  \n \n-\n \n\nForfeited \n \n-\n  \n \n-\n \n\nBalance, December 31, 2024 \n 1,780,328  \n€0.22 \n\nGranted \n \n-\n  \n \n-\n \n\nVested \n \n-\n  \n \n-\n \n\nForfeited \n (52,586) \n \n-\n \n\nBalance, December 31, 2025 \n 1,727,742  \n€0.22 \n\n \n\nAs of December 31, 2025 and 2024, the unrecognized\nstock-based compensation of €135,924 and €267,940 is expected to be recognized over a weighted -average period of 2 years and\n2.5 years, respectively.\n\n \n\n**NOTE 15 – RESERVE**\n\n** **\n\nAs of December 31, 2025 and 2024, reserve\nwas €1,411,846 and €1,411,846 comprised of legal reserves and other reserves, respectively.\n\n** **\n\n**Legal reserve**\n\n** **\n\nIn accordance with the Capital Company Law, companies\nmust allocate an amount equal to 10% of the profit for the year to the legal reserve until it reaches 20% of the share capital. The legal\nreserve may only be used to increase the share capital. Except for the above purpose and as long as it does not exceed 20% of the share\ncapital, the legal reserve can only be used to offset losses, provided there are no other reserves available which are sufficient for\nthis purpose. As of December 31, 2025 and 2024, it was partially constituted after the aforementioned capital increase. As of December 31,\n2025 and 2024, legal reserve was €500,857 and €500,857, respectively.\n\n \n\n**Other reserve**\n\n** **\n\nThe Company maintains an unrestricted reserve\nfor undistributed profits from previous years. As of December 31, 2025 and 2024, other reserves were €910,989 and €910,989,\nrespectively.    \n\n** **\n\nF-25\n\n \n\n** **\n\n**NOTE 16 – LEASES**\n\n** **\n\nAs of December 31, 2025 and 2024, the Company\nhad the following lease obligations:   \n\n \n\n  \nDiscount \n  \nDecember 31,  \nDecember 31, \n\n  \nRate \nMaturity \n2025  \n2024 \n\nCurrent \n3.0 % - 4.5% \n2025-2028 \n€12,203  \n€32,367 \n\nNon-current \n3.0 % - 4.5% \n2026-2028 \n 10,059  \n 3,958 \n\n  \n  \n  \n€22,261  \n€36,325 \n\n \n\nBalance - December 31, 2022 \n€95,059 \n\nLease liability additions \n 19,353 \n\nRepayment of Lease liability \n (60,523)\n\nInterest expense on lease liabilities \n 2,177 \n\nBalance - December 31, 2023 \n€56,066 \n\nLease liability additions from lease modification \n 41,944 \n\nRepayment of Lease liability \n (63,996)\n\nInterest expense on lease liabilities \n 2,311 \n\nBalance - December 31, 2024 \n€36,325 \n\nLease liability additions \n 42,644 \n\nCancellation of lease \n (11,795)\n\nRepayment of Lease liability \n (47,941)\n\nInterest expense on lease liabilities \n 3,028 \n\nBalance – December 31, 2025 \n€22,261 \n\n  \n\nOn September 8, 2020, the Company entered into\na vehicle lease agreement under a four-year term and monthly lease payment of €527. The lease expired on September 8, 2024 and was\nfully paid off.\n\n \n\nOn June 1, 2022, the Company entered into\nan office lease agreement under a two-year term extensible for three years upon expiry and monthly lease payment of €3,384 during\nthe first year and €3,492 during the second year. On April 1, 2024, the Company extended the office lease for one additional year\nstarting from June 2024 through May 2025 with a monthly payment of €3,618.\n\n \n\nOn September 26, 2022, the Company entered into\na vehicle lease agreement under a three-year term and monthly lease payment of €420.\n\n \n\nOn November 15, 2022, the Company entered into\na vehicle lease agreement under a three-year term and monthly lease payment of €417. The lease was cancelled on January 1, 2025.\nDuring the six months ended June 30, 2025, the Company recognized gain from cancellation of the lease of €137.\n\n \n\nOn August 17, 2023, the Company entered into a\nvehicle lease agreement under a three-year term and monthly lease payment of €572.\n\n \n\nOn February 2, 2024, the Company entered into\na vehicle lease agreement under a three-year term and monthly lease payment of €458.\n\n \n\nOn April 27, 2024, the Company entered into a\nvehicle lease agreement under a four-year term and monthly lease payment of €619.\n\n \n\nF-26\n\n \n\n \n\nThe following table summarizes the maturity of\nour lease liabilities as of December 31, 2025:\n\n \n\nFor the year ended December 31, \n  \n\n2026 \n€12,922 \n\n2027 \n 7,887 \n\n2028 \n 2,476 \n\nTotal lease payments \n 23,286 \n\nLess: financing cost \n (1,025)\n\nLease liabilities \n€22,261 \n\n \n\nAs of December 31, 2025 and 2024, the Company has right-of-use\nassets as follows:\n\n \n\nBalance - December 31, 2022 \n€94,106 \n\nAdditions \n 19,353 \n\nDepreciation \n (58,524)\n\nBalance - December 31, 2023 \n€54,935 \n\nAdditions from lease modification \n 41,944 \n\nDepreciation \n (61,568)\n\nBalance - December 31, 2024 \n€35,311 \n\nAdditions from lease modification \n 42,644 \n\nDepreciation \n (45,162)\n\nCancellation of lease \n (11,349)\n\nBalance – December 31, 2025 \n€21,444 \n\n** **\n\n**NOTE 17 – FINANCIAL INSTRUMENTS AND RISK\nMANAGEMENT**\n\n** **\n\nSet out below are categories of financial instruments\nand fair value measurements as of December 31, 2025 and 2024:\n\n \n\n  \nDecember 31,  \nDecember 31, \n\n  \n2025  \n2024 \n\nFinancial assets at fair value \n   \n  \n\nCash \n€493,129  \n€2,384,625 \n\n  \n    \n   \n\nFinancial assets at amortized cost \n    \n   \n\nAccounts receivable and other receivables \n€1,739,775  \n€2,926,132 \n\nAmount due from related parties \n€10,443,887  \n€246,220 \n\n  \n    \n   \n\nFinancial liabilities at amortized cost \n    \n   \n\nAccounts payable and accrued liabilities \n€12,647,530  \n€2,910,818 \n\nAmount due to related parties \n€2,929,117  \n€1,792,045 \n\nLease liabilities \n€22,262  \n€36,325 \n\nBank loans \n€4,510,831  \n€4,369,949 \n\nDebt bond \n€2,314,057  \n€865,882 \n\n** **\n\nF-27\n\n \n\n** **\n\n**Liquidity risk**\n\n** **\n\nLiquidity risk is the risk that the Company will\nnot have sufficient cash resources to meet its financial obligations as they come due in the normal course of business. Liquidity risk\nalso includes the risk of not being able to liquidate assets in a timely manner at a reasonable price. Difficulty accessing the capital\nmarkets could impair the Company’s capacity to grow, execute its business model and generate financial returns. The Company manages\nits liquidity risk by monitoring its operating requirements to ensure financial resources are available, actively monitoring market conditions\nand by diversifying its sources of funding and maintaining a diversified maturity profile of its debt obligations.\n\n \n\n**Credit risk**\n\n** **\n\nCredit risk is the risk that one party to a financial\ninstrument will cause a financial loss for the other party by failing to discharge an obligation. The Company’s main credit risk\nrelates to its cash and accounts receivable. The Company’s credit risk is reduced by a broad customer base and a review of customer\ncredit profiles.\n\n \n\nThe Company’s maximum exposure to credit\nrisk corresponds to the carrying amount for all cash and accounts receivable. Cash is held with prominent financial institutions. Accounts\nreceivable are held with vendors in which the Company has a historically strong relationship with or related to VAT receivable.\n\n \n\nThe Company mitigates credit risk associated with\nits trade receivables through established credit approvals, limits and a regular monitoring process. The Company generally considers the\ncredit quality of its financial assets that are neither past due nor impaired to be solid. Credit risk is further mitigated due to the\nlarge number of customers and their dispersion across geographic areas.\n\n \n\nFor the year ended December 31, 2025 and 2024,\nthere were one and two customers who accounted for greater than 10% of the Company’s revenue, which represented 49% and 12% of the\nCompany’s revenue, respectively. For the year ended December 31, 2023, there were no customers who accounted for greater than 10%\nof the Company’s revenue. \n\n \n\n**Market risk**\n\n** **\n\nMarket risk is the risk that the fair value or\nfuture cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk:\ncurrency risk, interest rate risk and other price risk.\n\n \n\n**Currency risk**\n\n** **\n\nCurrency risk is the risk that the fair value\nor future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Company is not exposed\nto significant currency risk.\n\n** **\n\n** Interest risk**\n\n** **\n\nInterest rate risk is the risk that the fair value\nof future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company is exposed to interest\nrate risk on its lines of credit due to fluctuations in interest rates. The Company’s bank loans and leases have fixed rates of\ninterest resulting in limited interest rate fair value risk for the Company. The Company manages interest rate risk by negotiating financing\nterms in individual arrangements that are most advantageous, considering all relevant factors including credit margin, term and basis.\nThe risk management objective is to minimize the potential for changes in interest rates to cause adverse changes in cash flows to the\nCompany.\n\n**  **\n\n**Other price risk**\n\n** **\n\nOther price risk is the risk that the fair value\nof future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest\nrate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer,\nor factors affecting all similar financial instruments traded in the market. The Company is not exposed to other price risk.\n\n \n\n**Legal risk**\n\n** **\n\nOn April 2025, Boustead Securities, LLC (“Boustead”)\ninitiated an arbitration proceeding against Turbo Energy, S.L. (“Turbo Energy” or the “Company”) before the Financial\nIndustry Regulatory Authority (“FINRA”), Case No. 25-01072. The arbitration arises from Boustead’s prior role as placement\nagent and underwriter in connection with the Company’s initial public offering. Boustead’s claims seek recovery of approximately\n$216,000 in cash fees and warrants for more than 96,000 shares of the Company, which Boustead alleges are due pursuant to a right of first\nrefusal provision contained in the parties’ March 7, 2022 Engagement Agreement.\n\n \n\nOn August 7, 2025, Turbo Energy filed its Answer\nand asserted counterclaims against Boustead, alleging, among other things, breach of contract, negligent misrepresentation, and fraud,\nand seeking damages and other relief. Turbo Energy’s counterclaims arise from disputes concerning the calculation and payment of\ncertain expenses and the scope and enforceability of Boustead’s right of first refusal. On August 27, 2025, Boustead filed its response\ndenying all allegations in Turbo’s counterclaims and asserting affirmative defenses.\n\n \n\nOn September 18, 2025, the FINRA arbitration panel\nissued an order denying Boustead’s motion to change the hearing location. The arbitration proceedings remain ongoing. The Company\nintends to vigorously pursue its counterclaims and defend against all claims asserted by Boustead. At this stage, the Company cannot predict\nthe outcome of the arbitration or estimate any potential loss or recovery.\n\n \n\nF-28\n\n \n\n \n\n**Capital management**\n\n** **\n\nThe Company’s capital consists of share\ncapital and reserve. The Company’s capital management is designed to ensure that it has sufficient financial flexibility both in\nthe short and long-term to support its financial obligations and the future development of the business.\n\n \n\nThe Company manages its capital with the following\nobjectives:\n\n \n\n \n(i)\nEnsuring sufficient liquidity is available to support its financial obligations and to execute its operating strategic plans;\n\n \n\n \n(ii)\nMaintaining financial capacity and flexibility through access to capital to support future development of the business;\n\n \n\n \n(iii)\nMinimizing its cost of capital and considering current and future industry, market and economic risks and conditions; and\n\n \n\n \n(iv)\nUtilizing short-term funding sources to manage its working capital requirements and long- term funding sources to match the long-term nature of the property, plant and equipment of the business.\n\n \n\nThere were no changes to the Company’s approach\nto capital management during the years ended December 31, 2025 and 2024. The Company is not subject to externally imposed capital\nrequirements.\n\n** **\n\n**NOTE 18 – INCOME TAX** \n\n** **\n\nThe Company conducts its major businesses in Spain\nand is subject to tax in this jurisdiction. During the years ended December 31, 2025, 2024 and 2023, all taxable income of the Company\nis generated in Spain.\n\n \n\nDuring 2025, 2024 and 2023, the general tax rate\nto which the Company is subject is 25%.\n\n \n\nThe below table summarizes the computation of\nincome tax expense for the year ended December 31, 2025, 2024 and 2023:\n\n \n\n  \nYear Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nNet income (loss) before taxes \n€(1,544,691) \n€(4,481,601) \n€(3,130,635)\n\nAdd: permanent differences \n 955,187  \n 2,539,999  \n 886,178 \n\nAdd (less): temporary differences \n 589,505  \n 1,941,602  \n (68,819)\n\nLess: cancellation of negative tax base \n \n-\n  \n \n-\n  \n \n-\n \n\nTaxable income (loss) \n \n-\n  \n \n-\n  \n (2,313,276)\n\nTax rate at 25% \n \n-\n  \n \n-\n  \n (93,022)\n\nAdd (less): deferred income tax expenses (recovery) \n (388,382) \n (1,144,601) \n (1,023,826)\n\nIncome tax expense (recovery) \n€(388,382) \n€(1,144,601) \n€(1,116,848)\n\n \n\nThe following table provides a reconciliation\nbetween the statutory rate and the effective income tax rate, expressed as a percentage of income before income taxes:\n\n \n\n  \nYear Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nTax at the statutory rate \n 25.0% \n 25.0% \n 25.0%\n\nPermanent differences \n (15.4)% \n 0.0% \n (7.1)%\n\nTemporary differences \n (3.4)% \n (10.8)% \n 0.6%\n\nCancellation of negative tax basis \n 0.0% \n 0.0% \n 0.0%\n\nTax Credit \n 0.0% \n 0.0% \n 0.0%\n\nEffective tax rate \n 6.2% \n 14.2% \n 18.5%\n\n \n\nF-29\n\n \n\n \n\nThe Company has carried out a detailed analysis\nof the recoverability of the deferred assets recorded on its balance sheet. Since Turbo Energy is fiscally consolidated with its parent\ncompany, Umbrella Global Energy, the analysis has been conducted in collaboration with independent experts and is based on the Group’s\nprojections of taxable profits and resource generation in foreseeable future. \n\n \n\nUmbrella Global Energy has achieved the connection\nof up to five IPP plants during 2025 and will connect another one during the next months in 2026, that in the best judgment of the management\nwill generate enough taxable profits to fully utilize Company’s recorded tax losses.\n\n \n\nUnder Spanish Corporate Income Tax law, a group\nof companies can opt to be taxed as a fiscal unit, meaning that the group is treated as a single taxpayer. \n\n \n\nThe parent company and its subsidiaries form the\ntax group. The group files a single consolidated tax return, being the taxable base of the group the aggregate of the individual bases,\nadjusted by consolidation adjustments (such as eliminations and incorporation of internal gains/losses). Companies and groups of companies\nwith tax loss carryforwards (BINS) can use them to offset future profits. \n\n \n\n**NOTE 19 – REVENUE**\n\n** **\n\nThe Company’s sales are derived from sales of\nelectronic products and services. The following is the Company’s revenue by geographical markets during the years ended December\n31, 2025, 2024 and 2023:\n\n \n\n  \nYear Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nSpain \n€18,223,979  \n€7,397,108  \n€10,886,713 \n\nEurope \n 809,866  \n 1,598,591  \n 1,679,395 \n\nRest of the world \n 840,681  \n 420,920  \n 537,571 \n\n  \n€19,874,526  \n€9,416,619  \n€13,103,679 \n\n \n\nDuring the years ended December 31, 2025,\n2024 and 2023, the Company recognized revenue of €19,874,526, €9,416,619 and €13,103,679, respectively, of which €10,524,288,\n€306,651 and €1,380,547 derived from related parties, respectively.\n\n \n\nWe consider related parties those companies that\nare part of Umbrella Energy Group.\n\n** **\n\n**NOTE 20 – COST OF REVENUE**\n\n** **\n\n  \nYear Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nPurchase of finished goods \n€25,241,021  \n€16,876,097  \n€18,804,222 \n\nPurchase of raw materials \n \n-\n  \n \n-\n  \n 1,530 \n\nOutsourcing service \n 261,414  \n 295,813  \n 22,184 \n\nPurchase return \n (307,496) \n \n-\n  \n \n-\n \n\nInventory adjustment \n (9,105,517) \n (8,091,567) \n (6,784,373)\n\n  \n€16,089,421  \n€9,080,343  \n€12,043,563 \n\n \n\nDuring the year ended December 31, 2025,\n2024 and 2023, the Company incurred cost of sales of €16,089,421, €9,080,343 and €12,043,563, respectively, of which €0,\n€0 and €1,201,244 were derived from related parties, respectively.\n\n** ** \n\nF-30\n\n \n\n \n\n**NOTE 21 – SELLING AND ADMINISTRATIVE\nEXPENSES**\n\n** **\n\nThe Company incurred the following selling and\nadministrative expenses during the years ended December 31, 2025, 2024 and 2023.\n\n \n\n  \nYear Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nProfessional fees \n€1,592,288  \n€1,787,047  \n€1,247,866 \n\nShipping and handling expenses \n 316,706  \n 288,645  \n 290,787 \n\nWarehouse handling \n 73,134  \n 65,741  \n 78,095 \n\nMiscellaneous operating expenses \n 226,994  \n 229,202  \n 242,827 \n\nMarketing and advertising \n 177,671  \n 159,543  \n 335,303 \n\nLeases and royalties \n 82,237  \n 169,643  \n 142,503 \n\nInsurance premiums \n 232,180  \n 163,975  \n 52,726 \n\nRepair and conservation \n 12,025  \n 5,115  \n 15,510 \n\nSupplies \n 4,262  \n 4,538  \n 3,908 \n\nOther management expense \n 532  \n 1,473  \n \n-\n \n\nFines and penalty \n 592  \n \n-\n  \n 2,396 \n\nDepreciation of property and equipment \n 70,045  \n 11,815  \n 19,425 \n\nAmortization of intangible assets \n 196,956  \n 49,684  \n 49,984 \n\nAmortization of right-of-use assets \n 45,162  \n 61,568  \n 58,524 \n\n  \n€3,030,784  \n€2,997,989  \n€2,539,854 \n\n \n\nDuring the years ended December 31, 2025,\n2024 and 2023, the Company incurred selling and administrative expenses of €3,030,784, €2,997,989 and €2,539,854, respectively,\nof which €360,787, €848,832 and €1,010,769 derived from related parties, respectively.\n\n** **\n\n**NOTE 22 – SUPPLEMENTAL CASH FLOW INFORMATION**\n\n** **\n\nSet out below are non-cash investing and financing\nactivities during the years ended December 31, 2025, 2024 and 2023:\n\n** **\n\nNon-cash investing and financing activities:\n\n \n\n  \nYear Ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nReallocation of opening deficit to reserve \n€\n-\n  \n€\n-\n  \n€(1,028,578)\n\nRecognition of right-of-use assets from lease extension \n€\n-\n  \n€41,944  \n€\n-\n \n\nRecognition of right-of-use assets from lease addition \n€\n-\n  \n€\n-\n  \n€19,353 \n\nRecognition of right-of-use assets from lease modification \n€42,644  \n€\n-\n  \n€\n-\n \n\nDerecognition of right-of-use assets \n€11,349  \n€\n-\n  \n€\n-\n \n\nConversion form related party loan to capital contribution \n€\n-\n  \n€600,000  \n€\n-\n \n\n \n\nDuring the years ended December 31, 2025,\n2024 and 2023, the Company paid interest of €174,596, €168,030 and €404,093, respectively, and income taxes of €0,\n€0 and €0, respectively.  \n\n \n\nF-31\n\n \n\n \n\n**NOTE 23 – SUBSEQUENT EVENTS**\n\n \n\nIn February 2026, the Company announced the successful completion of\na restructuring of its bank financing aimed at strengthening its financial position and aligning liquidity with the Company’s medium-\nand long-term business plan. As part of this process, Turbo Energy reached agreements with Bankinter, CaixaBank and BBVA, three of Spain’s\nleading financial institutions, enabling the conversion of existing bank facilities into long-term financing structures totaling approximately\n€4.87 million (approximately $5.75 million in U.S. dollars), whose new maturity date will be in 2029. The interest rate applicable\nin each period shall be the result of adding the relevant reference rate (12-month EURIBOR) plus a margin equivalent to 2% per annum.\n\n \n\nThe Company carried out several fundraising transactions\nin the U.S. market through the issuance of ordinary shares represented by American Depositary Securities (ADSs), using placement structures\ncommonly used in that market, including a Registered Direct Offering (RDO) and subsequent placements under an “at-the-market”\n(ATM) program.\n\n \n\nOverall, the transactions described above resulted\nin the issuance of approximately 7.8 million shares, equivalent to approximately 1.56 million ADSs, for total gross proceeds of $5,045,185,\nwhich after direct fees and commissions totals approximately $4,610,337.\n\n \n\nThese transactions were executed progressively,\nwith trade dates between March 11 and April 13, 2026, and settlement dates between March 13 and April 14, 2026, reflecting a staged fundraising\nprocess based on market 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