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 second quarter
of 2023.
Company Highlights:
- As of June 30, 2023, we have 142 dealers
- Taken delivery of our first eight Stag validation units in 2023
that include our custom suspension parts in addition to the GM
propulsion components and expect to launch the Stag to dealers in
the fourth quarter of 2023
- Have taken pre-orders for the Stag of more than $115 million of
expected revenue if all orders are fulfilled1
- Grunt EVO launch expected in the third quarter of 2023 and Runt
LT launch expected in the fourth quarter of 2023
The Company’s US dealer count has remained consistent with the
count as of March 31, 2023 (143). The Company has deferred the
signing of Canadian dealers until 2024 due to delays in product
availability and requirements to homologate all products that will
be sold in Canada.
The Company has made significant progress on the development of
the Stag and has put thousands of miles of testing on the
validation units received thus far. Jordan Davis, CEO notes, “Over
the past quarter, we have conducted rigorous testing of the Stag
and have learned a lot from the results. We have gone through
dozens of testing iterations, having identified the weak points so
common in off-road vehicle design, and have improved the safety,
reliability, and durability of our parts and sub-assemblies. So
much so, that to a great extent many of our components and
assemblies are automotive grade, as the power and torque the Stag
produces via its electric drivetrain has been too much for standard
UTV parts. While testing has delayed the expected third quarter
launch of the Stag, we remain confident that deliveries of the Stag
will begin in the fourth quarter of 2023.” Pre-orders and interest
for the Stag from dealers and consumers continues to be strong and
we continued to take waitlist orders from interested dealers and
end users alike during the second quarter of 2023.
Our third-party manufacturer has concluded that they will
assemble the Grunt EVO, Runt LT and Stag in their facility in
Puebla, Mexico, rather than at Electrameccanica Motor Vehicles’
facility in Mesa, Arizona. Davis comments, “Although having final
assembly of our products in Mexico is a significant change from our
third-party’s original plans, this does not result in a significant
increase in cost of these vehicles to our customers. We support the
decision our partner made to move production to Mexico, as this
provides for additional control of vertically integrated processes,
additional manufacturing stability, as well as accretive margin in
that we will not be paying another party to use their facility or
labor. This also provides distribution efficiency for our Latin
American and South American partners.”
Production of the Grunt EVO has started as of date of this press
release and we expect delivery of the vehicle to customers in
August 2023. We expect that the Runt LT to launch in the fourth
quarter of 2023 due to supply chain shortages of certain parts.
________________1 Pre-orders are cancelable until they are
fulfilled.
Financial highlights:
|
|
3 Months Ended |
|
|
Six Months Ended |
|
GAAP |
|
June 30, 2023 |
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
|
June 30, 2023 |
|
|
June 30, 2022 |
|
Revenue |
|
$ |
519,300 |
|
|
$ |
1,170,458 |
|
|
$ |
751,621 |
|
|
$ |
1,689,758 |
|
|
$ |
3,552,355 |
|
Cost of goods sold |
|
|
(334,647 |
) |
|
|
(1,229,981 |
) |
|
|
(1,862,949 |
) |
|
|
(1,564,628 |
) |
|
|
(9,537,042 |
) |
Gross Margin |
|
|
184,653 |
|
|
|
(59,523 |
) |
|
|
(1,111,328 |
) |
|
|
125,130 |
|
|
|
(5,984,687 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales & Marketing |
|
|
2,380,617 |
|
|
|
1,789,370 |
|
|
|
1,751,729 |
|
|
|
4,169,987 |
|
|
|
2,660,813 |
|
Product Development |
|
|
1,166,732 |
|
|
|
1,786,351 |
|
|
|
1,680,389 |
|
|
|
2,953,083 |
|
|
|
4,598,421 |
|
General &
Administrative |
|
|
1,568,700 |
|
|
|
1,890,091 |
|
|
|
1,637,176 |
|
|
|
3,458,791 |
|
|
|
5,324,391 |
|
Total Operating Expenses |
|
|
5,116,049 |
|
|
|
5,465,812 |
|
|
|
5,069,294 |
|
|
|
10,581,861 |
|
|
|
12,583,625 |
|
Loss from Operations |
|
|
(4,931,396 |
) |
|
|
(5,525,335 |
) |
|
|
(6,180,622 |
) |
|
|
(10,456,731 |
) |
|
|
(18,568,312 |
) |
Other Income (Expense) |
|
|
(18,096,798 |
) |
|
|
(1,774,134 |
) |
|
|
(1,616,791 |
) |
|
|
(19,870,932 |
) |
|
|
29,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(23,028,194 |
) |
|
$ |
(7,299,469 |
) |
|
$ |
(7,797,413 |
) |
|
$ |
(30,327,663 |
) |
|
$ |
(18,538,808 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Revenue: The Company’s revenue for the second quarter of 2023
was $0.5 million, a decrease of $0.7 million over the first quarter
2023. The decrease over the first quarter of 2023 was partially due
to a decrease in Grunts sold in the second quarter of 2023 (none)
compared to the first quarter of 2023 as the Grunt EVO launch was
delayed due to part shortages and a decrease in Brats sold in the
second quarter of 2023 compared to the first quarter of 2023,
primarily due to US dealers and LATAM distributor initial orders
being fulfilled in the first quarter of 2023 and reorders did not
occur in the second quarter of 2023.
- Net loss: The Company’s net loss was $23.0 million for the
second quarter of 2023 compared to a net loss of $7.3 million for
the first quarter of 2023 and $7.8 million for the fourth quarter
of 2022. 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 related to 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 six month period ended June
30, 2023. 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. In
addition, 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
the gain on derivative liabilities. The Company’s
adjusted EBITDA for the second quarter of 2023 was a loss of $1.3
million compared to a loss of $4.4 million for the first quarter of
2023 and a loss of $5.4 million for the fourth quarter of
2022. 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 powersports 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 2023 vehicle roadmap includes both motorcycles and UTVs
hitting the market in North America. Its first product, the
innovative Grunt, has been shipping to customers since 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 will launch in the third quarter of 2023. The launch of the
Runt LT, which is a fun-sized version of the groundbreaking Grunt,
is 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, is expected to launch in the fourth
quarter of 2023. The Brat is Volcon’s first foray into the wildly
popular eBike market for both on road and off-road riding and is
currently available in dealers across North America and the Company
also sells the Brat from its website for delivery directly to US
consumers. Volcon is also currently delivering the Volcon Youth
Line of dirt bikes for younger riders between the ages of 4 to 11.
Volcon recently launched the Stag and entered the rapidly expanding
UTV market. 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.com For Dealers: dealers@volcon.com For
Investors: investors@volcon.com For 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 June 30, 2023, March 31, 2023 and December
31, 2022 and the six months ended June 30 2023 and 2022:
Adjusted
EBITDA |
|
3 Months Ended |
|
|
Six Months Ended |
|
|
|
June 30,2023 |
|
|
March 31,2023 |
|
|
December 31,2022 |
|
|
June 30,2023 |
|
|
June 30,2022 |
|
Net loss |
|
$ |
(23,028,194 |
) |
|
$ |
(7,299,469 |
) |
|
$ |
(7,797,413 |
) |
|
$ |
(30,327,663 |
) |
|
$ |
(18,538,807 |
) |
Share-based compensation
expense |
|
|
1,682,827 |
|
|
|
1,057,435 |
|
|
|
616,870 |
|
|
|
2,740,262 |
|
|
|
2,199,869 |
|
Depreciation and amortization
expense |
|
|
106,625 |
|
|
|
51,841 |
|
|
|
188,710 |
|
|
|
158,466 |
|
|
|
306,756 |
|
Interest expense |
|
|
3,385,204 |
|
|
|
1,780,019 |
|
|
|
1,631,756 |
|
|
|
5,165,223 |
|
|
|
9,482 |
|
Loss on extinguishment of
convertible notes |
|
|
22,296,988 |
|
|
|
– |
|
|
|
– |
|
|
|
22,296,988 |
|
|
|
– |
|
Gain on change in fair value of derivative liabilities |
|
|
(5,792,788 |
) |
|
|
– |
|
|
|
– |
|
|
|
(5,792,788 |
) |
|
|
– |
|
Adjusted EBITDA |
|
$ |
(1,349,338 |
) |
|
$ |
(4,410,174 |
) |
|
$ |
(5,360,077 |
) |
|
$ |
(5,759,512 |
) |
|
$ |
(16,022,700 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forward-Looking StatementsSome 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 pre-orders
for the Stag are fulfilled, the launch date of the Grunt EVO, Runt
LT and Stag, and the ability of the Company to continue to sign new
dealers during 2023. 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, including those discussed under Item 1A. “Risk
Factors” in our most recently filed Form 10-K filed with the
Securities and Exchange Commission (“SEC”) and updated from time to
time in our Form 10-Q filings and in our other public filings with
the SEC. 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.
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