Volcon ePowersports Reports Third Quarter 2023 Operational and Financial Results
October 31 2023 - 8:30AM
Volcon Inc. (NASDAQ: VLCN) (“Volcon'' or the “Company”), the first
all-electric, off-road powersports company, today reported its
operational highlights and financial results for the third quarter
of 2023.
Company Highlights:
● |
|
Announced the Stag trim packages,
including pricing, that includes four models with the Stag LTD
being the first model we will be producing |
● |
|
As of September 30, 2023, we
delivered the first Grunt EVOs to a customer and continue to
fulfill orders to dealers and distributors in the fourth quarter of
2023 |
● |
|
As of September 30, 2023, we have
133 dealers and obtained an accounts receivable factoring
agreement |
● |
|
Delayed the launch of the Runt LT
until 2024 |
The Company continues to make significant progress on the
development of the Stag. The Company completed all regulatory and
safety tests for the Stag and continues to put test miles on the
validation units. Jordan Davis, CEO, notes, “Based on earlier
regulatory and safety tests, we knew we were developing not only a
great performance vehicle, but also one that will be safe for
customers. The test results validate that the automotive grade
components, although more expensive than UTV grade components, have
proven to be the right choice for the Stag given the level of
performance, without compromising safety, we have been working
towards. Although this has resulted in higher vehicle cost
requiring us to raise prices, we believe that this vehicle is at
the top of its class, whether it be electric or gas powered.” The
Company has asked that dealers, distributors, and consumers who
placed pre-orders go back to the Company website or work with their
regional sales managers to adjust their orders based on the new
trim packages. Although the Company expected to begin delivery of
the Stag in October 2023, due to a delay in certain parts, the
launch is now anticipated to be November 2023.
Delivery of the Grunt EVO started in late September 2023 and as
of the date of this press release we have shipped over 50 Grunt
EVOs to customers from our US warehouse in Round Rock, Texas and we
have additional orders to fulfill both domestically as well as to
our LATAM distributors. Although we expected that the Runt LT would
launch in the fourth quarter of 2023, we have deferred the launch
to focus on distribution of the Grunt EVO as well as to start
shipping the Stag.
The Company’s US dealer count has declined by 10 dealers since
June 30, 2023, as some dealers have terminated their dealer
agreement due to higher prices on the Stag or due to credit terms
not being extended by the Company due to the Company’s evaluation
of creditworthiness. The Company has entered into an accounts
receivable factoring arrangement with Prestige Capital Finance, LLC
that will allow the Company to factor US dealer accounts
receivables which will allow the Company to reinvest proceeds into
additional purchases of inventory to fulfill customer orders. The
Company has deferred the signing of Canadian dealers until 2024 at
the earliest, due to delays in product availability and
requirements to homologate all products that will be sold in
Canada.
Financial highlights:
|
|
3 Months Ended |
|
|
Nine Months Ended September |
|
GAAP |
|
September 30, 2023 |
|
|
June 30, 2023 |
|
|
March 31, 2023 |
|
|
2023 |
|
|
2022 |
|
Revenue |
|
$ |
487,430 |
|
|
$ |
519,300 |
|
|
$ |
1,170,458 |
|
|
$ |
2,177,188 |
|
|
$ |
3,795,065 |
|
Cost of goods sold |
|
|
(3,542,468 |
) |
|
|
(334,647 |
) |
|
|
(1,229,981 |
) |
|
|
(5,107,096 |
) |
|
|
(11,549,871 |
) |
Gross Margin |
|
|
(3,055,038 |
) |
|
|
184,653 |
) |
|
|
(59,523 |
) |
|
|
(2,929,908 |
) |
|
|
(7,754,806 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales & Marketing |
|
|
1,870,532 |
|
|
|
2,380,617 |
|
|
|
1,789,370 |
|
|
|
6,040,519 |
|
|
|
3,942,827 |
|
Product Development |
|
|
2,983,197 |
|
|
|
1,166,732 |
|
|
|
1,786,351 |
|
|
|
5,936,280 |
|
|
|
6,775,768 |
|
General &
Administrative |
|
|
1,544,344 |
|
|
|
1,568,700 |
|
|
|
1,890,091 |
|
|
|
5,003,135 |
|
|
|
7,409,601 |
|
Total Operating Expenses |
|
|
6,398,073 |
|
|
|
5,116,049 |
|
|
|
5,465,812 |
|
|
|
16,979,934 |
|
|
|
18,128,196 |
|
Loss from Operations |
|
|
(9,453,111 |
) |
|
|
(4,931,396 |
) |
|
|
(5,525,335 |
) |
|
|
(19,909,842 |
) |
|
|
(25,883,002 |
) |
Other Income (Expense) |
|
|
(1,874,785 |
) |
|
|
(18,096,798 |
) |
|
|
(1,774,134 |
) |
|
|
(21,745,717 |
) |
|
|
(554,989 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(11,327,896 |
) |
|
$ |
(23,028,194 |
) |
|
$ |
(7,299,469 |
) |
|
$ |
(41,655,559 |
) |
|
$ |
(26,437,991 |
) |
● |
|
Revenue: The Company’s revenue
for the third quarter of 2023 was $0.5 million, consistent with the
revenue for the second quarter 2023. Revenue for both quarters is
primarily related to the sale of Brats with approximately $37,000
of sales of Grunt EVOs in the third quarter of 2023 compared to
zero in the second quarter of 2023. Revenue in the first
quarter of 2023 primarily related to Brats sold to US dealers and
LATAM distributor initial orders being fulfilled in the first
quarter of 2023. |
|
|
|
● |
|
Net loss: The Company’s net loss
was $11.3 million for the third quarter of 2023 compared to a net
loss of $23.0 million for the second quarter of 2023 and $7.3
million for the first quarter of 2023. Net loss in the
third quarter of 2023 includes a write-down of $1.6 million related
to Volcon Youth motorcycles to reduce the inventory to its
estimated net realizable value, a $0.7 million loss on the change
in derivative liabilities related to the adjustable conversion
features of convertible notes issued in May 2023 and the exchange
of August 2022 convertible notes for convertible notes and the
adjustable exercise price of warrants issued with the new notes
issued in May 2023 and exchange of the warrants issued with the
August 2022 convertible notes as more fully described in the
Company’s interim financial statements as of and for the three and
nine month periods ended September 30, 2023. The conversion
feature and warrants are no longer derivative liabilities as of
August 3, 2023, and have been reclassified to equity as of
September 30, 2023. In addition, in the third quarter of 2023, the
Company incurred higher prototype vehicle and part costs of $1.6
million over the second quarter of 2023 as the Company received
additional validation units in anticipation of a fourth quarter
2023 product launch. Net loss in the second quarter of 2023
includes a loss on extinguishment convertible notes of $22.3
million for the convertible notes issued in August 2022 for notes
issued in May 2023 and an exchange of convertible notes for the
August 2022 notes, partially offset by a gain on derivative
liabilities of $5.8 million for the derivative liabilities noted
above. The net loss for the second quarter of 2022 also includes
the reversal of warranty expense of approximately $0.5 million due
to the expiration of the one-year warranty on the Grunt as warranty
claims were substantially lower than the estimated warranty cost
initially recorded when Grunts sold. Product development
and general and administrative costs were lower in the second
quarter of 2023 compared to the first quarter of 2023 due to lower
vehicle and part prototype costs and lower legal and professional
fee costs and were partially offset by higher marketing costs to
promote our vehicles and brand. |
|
|
|
● |
|
Adjusted EBITDA: Adjusted EBITDA
represents net loss adjusted to add back stock-based compensation,
depreciation and amortization expense, interest expense, and for
the second quarter of 2023, an adjustment for the loss on
extinguishment of convertible notes and for the third and second
quarter of 2023 the loss/gain on derivative
liabilities. The Company’s adjusted EBITDA for the third
quarter of 2023 was a loss of $8.9 million compared to the second
quarter of 2023 loss of $4.2 million. First quarter of 2023
Adjusted EBITDA was a loss of $4.4 million. See
“Non-GAAP Reconciliation” below. |
For the latest Company updates, follow Volcon on YouTube,
Facebook, Instagram, and LinkedIn. Investor information about the
Company, including press releases, company SEC filings, and more
can be found at http://ir.volcon.com.
About Volcon
Based in the Austin, Texas area, Volcon was founded as the first
all-electric power sports company producing high-quality and
sustainable electric vehicles for the outdoor community. Volcon
electric vehicles are the future of off-roading, not only because
of their environmental benefits but also because of their
near-silent operation, which allows for a more immersive outdoor
experience.Volcon's vehicle roadmap includes both motorcycles and
UTVs. Its first product, the innovative Grunt, began shipping to
customers in late 2021 and combines a fat-tired physique with
high-torque electric power and a near-silent drive train. The
Volcon Grunt EVO, an evolution of the original Grunt with a belt
drive, an improved suspension, and seat, began shipping to
customers in September 2023. Volcon will also offer the Runt LT, a
fun-sized version of the groundbreaking Grunt, better suited for
small-statured riders, more compact properties and trails, or as a
pit bike at race events, while still delivering robust off-road
capabilities. The Brat is Volcon’s first foray into the wildly
popular eBike market for both on-road and off-road riding and is
currently being delivered to dealers across North America. Volcon
is also currently delivering the Volcon Youth Line of dirt bikes
for younger riders between the ages of 4 to 11. Volcon debuted the
Stag in July 2022 and entered the rapidly expanding UTV market and
previously announced that it expects to begin shipping the Stag to
customers in November 2023. The Stag empowers the driver to explore
the outdoors in a new and unique way that gas-powered UTVs cannot.
The Stag offers the same thrilling performance of a standard UTV
without the noise (or pollution), allowing the driver to explore
the outdoors with all their senses.
Volcon ContactsFor Media: media@volcon.comFor
Dealers: dealers@volcon.comFor Investors: investors@volcon.comFor
Marketing: marketing@volcon.com
For more information on Volcon or to learn more about its
complete motorcycle and side-by-side line-up, visit:
www.volcon.com
NON-GAAP RECONCILIATION
We believe presenting adjusted EBITDA provides management and
investors consistency and facilitates period to period comparisons
of operations, as it eliminates the effects of certain variations
to overall performance.
The following table reconciles net loss to adjusted EBITDA for
the three months ended September 30, 2023, June 30, 2023, and March
31, 2023, and the nine months ended September 30, 2023 and
2022:
Adjusted
EBITDA |
|
3 Months Ended |
|
|
9 Months Ended |
|
|
|
September 30,2023 |
|
|
June 30,2023 |
|
|
March 31,2023 |
|
|
September 30,2023 |
|
|
September 30,2022 |
|
Net loss |
|
$ |
(11,327,896 |
) |
|
$ |
(23,028,194 |
) |
|
$ |
(7,299,469 |
) |
|
$ |
(41,655,559 |
) |
|
$ |
(26,437,992 |
) |
Share-based compensation
expense |
|
|
540,528 |
|
|
|
625,394 |
|
|
|
1,057,435 |
|
|
|
2,223,357 |
|
|
|
2,642,139 |
|
Depreciation and amortization
expense |
|
|
67,178 |
|
|
|
54,783 |
|
|
|
51,841 |
|
|
|
173,802 |
|
|
|
574,116 |
|
Interest expense |
|
|
1,135,089 |
|
|
|
1,603,216 |
|
|
|
1,780,019 |
|
|
|
4,518,324 |
|
|
|
627,789 |
|
Loss on extinguishment of
convertible notes |
|
|
– |
|
|
|
22,296,988 |
|
|
|
– |
|
|
|
22,296,988 |
|
|
|
– |
|
Loss (Gain) on change in fair value of derivative liabilities |
|
|
684,994 |
|
|
|
(5,792,788 |
|
|
|
– |
|
|
|
(5,107,794 |
) |
|
|
– |
|
Adjusted EBITDA |
|
$ |
(8,900,107 |
) |
|
$ |
(4,240,601 |
) |
|
$ |
(4,410,174 |
) |
|
$ |
(21,034,515 |
) |
|
$ |
(22,593,947 |
) |
Forward-Looking Statements: Some of the
statements in this release are forward-looking statements, which
involve risks and uncertainties. Forward-looking statements in this
press release include, without limitation, whether the Company can
begin production of the Stag to meet expected deliveries to
customers beginning in November 2023, and whether production of the
Runt LT will occur. Although the Company believes that the
expectations reflected in such forward-looking statements are
reasonable as of the date made, expectations may prove to have been
materially different from the results expressed or implied by such
forward-looking statements. The Company has attempted to identify
forward-looking statements by terminology including ''believes,''
''estimates,'' ''anticipates,'' ''expects,'' ''plans,''
''projects,'' ''intends,'' ''potential,'' ''may,'' ''could,''
''might,'' ''will,'' ''should,'' ''approximately'' or other words
that convey uncertainty of future events or outcomes to identify
these forward-looking statements. These statements are only
predictions and involve known and unknown risks, uncertainties, and
other factors. Any forward-looking statements contained in this
release speak only as of its date. The Company undertakes no
obligation to update any forward-looking statements contained in
this release to reflect events or circumstances occurring after its
date or to reflect the occurrence of unanticipated events. More
detailed information about the risks and uncertainties affecting
the Company is contained under the heading “Risk Factors” in the
Company’s Annual Report on Form 10-K and subsequently filed
Quarterly Reports on Form 10-Q and Current Reports on Form 8-K
filed with the SEC, which are available on the SEC’s website,
www.sec.gov.
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