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Volcon(VLCN) - 2024 Q4 - Annual Report
VLCNVolcon(VLCN)2025-03-31 12:45

Financial Performance - Revenue for the year ended December 31, 2024, was 4,037,191,anincreaseof23.84,037,191, an increase of 23.8% compared to 3,260,988 in 2023[163][164]. - Cost of goods sold for 2024 was 18,168,288,significantlyhigherthan18,168,288, significantly higher than 11,391,040 in 2023, reflecting increased production costs[165][168]. - Net loss for 2024 was 45,510,309,slightlyhigherthanthenetlossof45,510,309, slightly higher than the net loss of 45,071,211 in 2023[186]. - Sales and marketing expenses decreased to 2,548,953in2024from2,548,953 in 2024 from 7,405,705 in 2023, indicating a strategic shift in marketing approach[172][173]. - Product development expenses were 2,668,330in2024,downfrom2,668,330 in 2024, down from 7,868,985 in 2023, as the company focuses on cost management[176][177]. - General and administrative expenses increased to 7,665,647in2024from7,665,647 in 2024 from 6,388,007 in 2023, driven by higher professional fees and insurance costs[180][181]. - Total operating expenses for 2024 were 12,882,930,down40.612,882,930, down 40.6% from 21,662,697 in 2023[212]. - Cash flow from operating activities showed a net cash used of (16,037,552)in2024,comparedto(16,037,552) in 2024, compared to (29,568,092) in 2023, indicating improved cash management[218]. - The company reported a net cash provided by financing activities of 10,373,092in2024,adecreasefrom10,373,092 in 2024, a decrease from 27,084,318 in 2023[218]. Financial Position - As of December 31, 2024, the company has an accumulated deficit of 166.3million[56].−Thecompanyhadcashandrestrictedcashof166.3 million[56]. - The company had cash and restricted cash of 2.3 million as of December 31, 2024, with a working capital of 0.4million[187].−Totalcurrentassetsdecreasedfrom0.4 million[187]. - Total current assets decreased from 19.5 million in 2023 to 5.1millionin2024,withsignificantreductionsincashandinventory[210].−Totalliabilitiesdecreasedfrom5.1 million in 2024, with significant reductions in cash and inventory[210]. - Total liabilities decreased from 41.8 million in 2023 to 6.2millionin2024,reflectingasubstantialreductioninconvertiblenotesandaccruedliabilities[210].−Shareholders′equityimprovedfromadeficitof6.2 million in 2024, reflecting a substantial reduction in convertible notes and accrued liabilities[210]. - Shareholders' equity improved from a deficit of 19.6 million in 2023 to 40,761in2024,followingadditionalcapitalraises[210].−Thecompanyhasrecurringlossesandhasgeneratednegativecashflowsfromoperationssinceinception,indicatingongoingfinancialchallenges[226].ComplianceandRegulatoryIssues−ThecompanyiscurrentlynotincompliancewithNasdaq′scontinuedlistingrequirements,withitscommonstocktradingbelow40,761 in 2024, following additional capital raises[210]. - The company has recurring losses and has generated negative cash flows from operations since inception, indicating ongoing financial challenges[226]. Compliance and Regulatory Issues - The company is currently not in compliance with Nasdaq's continued listing requirements, with its common stock trading below 1.00 for 30 consecutive business days as of December 19, 2023[129]. - The market value of the company's listed securities has been below the minimum 35millionrequiredforcontinuedlistingfortheprevious180calendardays[129].−AhearingwasheldonMarch26,2024,resultinginanextensionuntilJune24,2024,todemonstratecompliancewithNasdaqListingRules[130].−ThecompanycompletedreversestocksplitsinFebruary,June,andNovember2024toregaincompliancewithNasdaq′sbidpricerule[133].−ThecompanyreceivednoticesfromNasdaqregardingnon−compliancewithlistingrules,includingamarketvalueoflistedsecuritiesbelow35 million required for continued listing for the previous 180 calendar days[129]. - A hearing was held on March 26, 2024, resulting in an extension until June 24, 2024, to demonstrate compliance with Nasdaq Listing Rules[130]. - The company completed reverse stock splits in February, June, and November 2024 to regain compliance with Nasdaq's bid price rule[133]. - The company received notices from Nasdaq regarding non-compliance with listing rules, including a market value of listed securities below 35 million and a minimum bid price below 1.00pershare[232].−Thecompanycompletedmultiplereversestocksplitsin2024,includinga1for8splitonNovember8,2024[242].OperationalChallenges−Managementanticipatesthatcurrentcashandexpectedoperationalcashflowwillnotbesufficienttofundplannedoperationsbeyondoneyearfromthefinancialstatementdate[58].−Thecompanyfacespotentialproductiondelaysduetorelianceonsingle−sourcesuppliersforkeycomponents[72].−Increasedcostsorshortagesofmaterials,particularlybatterycells,couldadverselyaffectthecompany′soperatingresultsandmargins[79].−Thecompanyhasfacedsupplychainconstraintsleadingtodelaysinvehicleproduction,impactingbrandandfinancialcondition[80].−TheongoingconflictbetweenRussiaandUkrainecouldaffecttheavailabilityofnickel,whichconstitutes51.00 per share[232]. - The company completed multiple reverse stock splits in 2024, including a 1 for 8 split on November 8, 2024[242]. Operational Challenges - Management anticipates that current cash and expected operational cash flow will not be sufficient to fund planned operations beyond one year from the financial statement date[58]. - The company faces potential production delays due to reliance on single-source suppliers for key components[72]. - Increased costs or shortages of materials, particularly battery cells, could adversely affect the company's operating results and margins[79]. - The company has faced supply chain constraints leading to delays in vehicle production, impacting brand and financial condition[80]. - The ongoing conflict between Russia and Ukraine could affect the availability of nickel, which constitutes 5%-6% of the world's supply, potentially increasing production costs[83]. - The fulfillment of orders depends on third-party manufacturers successfully increasing production capacity, which is uncertain[103]. - The company faces risks of order cancellations due to delays between ordering and delivery, potentially harming financial condition[104]. Product Development and Market Strategy - The company launched the Brat E-Bike in December 2022 and expects to continue sales throughout 2025[62]. - The company signed agreements for the manufacturing of VLCN HF1 UTV and VLCN MN1 vehicles, along with a distribution agreement for golf carts in the U.S.[63]. - The company plans to expand its international distributor network, having already signed agreements with six distributors in Latin America[100]. - There is a significant need for product development and innovation to meet customer preferences and compete effectively[105]. - The company has limited experience in servicing vehicles and is developing a network of service providers, which is critical for customer satisfaction[106]. - The success of the company is tied to the adoption of electric vehicles in the off-road vehicle industry, which is rapidly evolving[111]. Cash Management and Financing - The company entered into an accounts receivable factoring arrangement to generate cash for working capital[98]. - The company received additional net proceeds of 8.8 million from the issuance of common stock after December 31, 2024[196]. - The company anticipates that its cash on hand and expected cash generation will not be sufficient to fund planned operations beyond one year from the financial statement issuance date, raising substantial doubt about its ability to continue as a going concern[231]. - The company converted approximately 7.4millionofprincipalfromConvertibleNotestocommonstockandexchanged7.4 million of principal from Convertible Notes to common stock and exchanged 24.7 million of remaining Convertible Notes for Preferred Stock in early 2024[227]. - The company issued Senior Notes with an aggregate principal amount of 2,942,170dueMay22,2025,resultinginnetproceedsof2,942,170 due May 22, 2025, resulting in net proceeds of 2,255,851[228]. - As of February 4, 2025, the company raised net proceeds of 9,143,725fromanAttheMarketequityoffering,withatotalofferingamountofupto9,143,725 from an At the Market equity offering, with a total offering amount of up to 100 million[230]. Changes in Leadership - The company has made significant changes in its executive team, including the resignation of the CEO and the appointment of a new CEO with a salary of 800,000andanannualbonusof800,000 and an annual bonus of 250,000[236][237].