Volcon Inc. has reported its operational highlights and financial results for Q3 of 2023. The company announced the Stag trim packages, including pricing, that includes four models with the Stag LTD being the first model will begin dealer deliveries in Q1 of 2024 at the recent PSB Accelerate Conference in Dallas, Texas.
As of September 30, 2023, Volcan says it has delivered the first Grunt EVOs to customers and continue to fulfill orders to dealers and distributors in the fourth quarter of 2023. And the Runt LT launch will be delayed until 2024. The electric powersports manufacturer says 133 dealers have signed on and it has obtained an accounts receivable factoring agreement.
Volcon says it has 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 return to Volcon’s website or work with their regional sales managers to adjust their orders based on the new trim packages and pricing structure. Although the company expected to begin delivery of the Stag in October 2023, the launch is now anticipated to be late Q4 ’23 or Q1 of ’24, due to a delay in certain parts.
Delivery of the Grunt EVO started in late September 2023. As of the date of this press release, Volcon says it has shipped over 50 Grunt EVOs to customers from its U.S. warehouse in Round Rock, Texas, and they have additional orders to fulfill both domestically as well as to 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 the distribution of the Grunt EVO and start shipping the Stag,” the company said in a statement.
Volcon’s U.S. dealer count has declined by 10 dealers since June 30, 2023, as some dealers have terminated their dealer agreements due to higher prices on the Stag or due to credit terms not being extended. The company says it has entered into an accounts receivable factoring arrangement with Prestige Capital Finance, LLC to enable it to factor U.S. dealer accounts receivables, allowing the Volcon to reinvest proceeds into additional inventory purchases to fulfill customer orders. The company also reports that it 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.
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.
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.