Volcon Inc. announced on Sept. 14, 2023 that it has agreed with its convertible noteholders to modify the terms of its convertible notes and implemented cost reduction strategies to provide the company greater flexibility as it pushes toward the introduction of the first of its UTV models, the Stag, which the company expects to begin delivering in October 2023.
The company entered into a note amendment with its convertible noteholders pursuant to which the lenders agreed to, among other changes, extend the maturity of the outstanding convertible notes from Feb. 24, 2024 to Jan. 31, 2025 and modify certain covenants to allow the company to execute its business strategy as it works toward the launch of the Stag. The amendment is subject to completion of a security agreement establishing a security interest in the assets of the company for the benefit of the noteholders.
“We appreciate the support of our noteholders in making these amendments in order to give us the flexibility to raise capital to support the launch of the Stag and the growth of our business,” said Jordan Davis, CEO. “With our Stag launch closing in, our ability to obtain funding to support manufacturing and to market the Stag to the public to generate consumer demand are key factors to our success.”
The company recently implemented further cost reduction initiatives and is continuing to evaluate its cost structure to identify incremental savings. Davis noted, “We continue to build upon our previously announced cost reduction measures, such as closing manufacturing operations in favor of outsourced production and reducing headcount in various areas of the company to support our vehicle development strategy.”
In addition, the company has reduced cash expenses by agreeing to eliminate cash bonuses payable to the company’s officers in favor of stock awards, and the CEO, chief financial officer and chief operating officer have voluntarily agreed to reduce their salaries by 10%. The company’s board of directors has also agreed that all future quarterly board cash fees will be payable in the form of stock awards as well. Davis noted, “The management team and the board know how important the Stag is to our company, and we recognize we need to personally support the cash reduction initiatives to ensure our success.”
On Sept. 13, 2023, the company announced additional trim packages and pricing for the Stag. The initial response by existing reservation holders who made deposits and viewed new trim level selections has been positive. The company continues to follow up with all pre-order reservation holders to make sure they are aware of the trim package options and answer any questions they may have. The company also realized new customer preorders, which further supports the Stag product line and the future of electric vehicles in powersports. The company has two consumer lending firms providing financing to consumers, Synchrony Bank and Octane Roadrunner Financial, which can be found on Volcon.com or by contacting Volcon dealers for more information.
In addition, the company’s sales team is connecting with dealers and distributors to place pre-orders. The overwhelming majority of dealers are committed to selling Volcon products and are excited that the Stag is finally coming to market. The company is also working with a finance company to obtain a facility that will allow the company to place Stags with dealers for small cash outlays, allowing the company to generate cash to reinvest in additional dealer placements. This facility will allow dealers to finance their Stag purchases.