Volcon Announces Pricing of $12 Million Registered Direct Offering Priced At-The-Market

Rhea-AI Summary

Volcon (NASDAQ: VLCN), the first all-electric, off-road powersports company, announced a $12 million registered direct offering of 3,287,671 shares of common stock and/or pre-funded warrants priced at $3.65 per share. The transaction is expected to close on July 12, 2024, subject to customary conditions. The offering's proceeds will be partly used to repay $2.94 million of principal on notes issued on May 22, 2024. Following the offering, Volcon will have no convertible debt or preferred stock and less than $40,000 in outstanding debt. The shares were registered with the SEC under Form S-3, effective March 21, 2023.

Positive

• Volcon will raise approximately $12 million from the direct offering.
• Proceeds will be used to repay $2.94 million in principal debt.
• The company will have no convertible debt or preferred stock following the offering.
• Volcon will have less than $40,000 in outstanding debt post-offering.

Negative

• Issuing 3,287,671 new shares may lead to shareholder dilution.

Insights

Financial Analyst

Volcon's successful $12 million offering is a noteworthy event for stock market investors, particularly those interested in the all-electric off-road powersports niche. The company has secured funds through the purchase of common stock and pre-funded warrants at $3.65 per share. This direct offering not only ensures fresh capital injection but also demonstrates investor confidence in Volcon's future trajectory.

One significant aspect is the debt reduction strategy. With approximately $2.94 million allocated to repay earlier issued notes, this move will positively impact Volcon’s balance sheet. Upon completion, the company will have less than $40,000 in debt. This reduction in leverage is a positive indicator for retail investors, signaling improved financial health and lower risk of insolvency.

Another critical factor is the conversion of all previously issued Series A convertible preferred stock to common stock. This conversion simplifies Volcon’s capital structure, making it more attractive to potential investors and possibly reducing the dilutive impact on current shareholders. Simplified structures often lead to higher stock valuations, as they make the company easier to understand and evaluate.

In the short-term, expect some dilution of the existing shares due to the new share issuance, which could depress the stock price temporarily. However, the long-term outlook appears promising, as the company's improved financial position and reduced debt load suggest it is on a path to sustainable growth.

Investors should keep an eye on how Volcon utilizes the remaining funds from the offering. Effective deployment of capital into growth initiatives or R&D could drive further value creation.

Legal Expert

The legal framework surrounding Volcon's direct offering is robust and well-structured. The filing of the registration statement on Form S-3 and its subsequent effectiveness as of March 21, 2023, indicates that this offering has complied with SEC regulations, ensuring transparency and investor protection.

Volcon's move to convert Series A convertible preferred stock into common stock not only simplifies the company's equity structure but also eliminates potential future claims and complexities arising from convertible instruments. This conversion, effective as of July 10, 2024, means that investors now have clear and unambiguous equity positions in the company, which is a positive development from a legal standpoint.

Furthermore, the engagement of reputable legal firms like ArentFox Schiff LLP and Kaufman & Canoles, P.C. for this offering provides an additional layer of confidence regarding the legal soundness of this transaction. It is important for retail investors to recognize that adherence to legal norms and the involvement of credible legal counsel can significantly mitigate risks associated with securities offerings.

AUSTIN, TX / ACCESSWIRE / July 11, 2024 / Volcon Inc. (NASDAQ:VLCN), ("Volcon" or the "Company"), the first all-electric, off-road powersports company, today announced that it has entered into securities purchase agreements with certain institutional investors for the purchase and sale of 3,287,671 shares of common stock and/or pre-funded warrants to acquire common stock in a registered direct offering. The purchase price of each share is $3.65. The purchase price for the pre-funded warrants is identical to the purchase price for the shares, less the exercise price of $0.00001.

The aggregate gross proceeds to the Company are expected to be approximately $12 million. The transaction is expected to close on or about July 12, 2024, subject to the satisfaction of customary closing conditions.

Aegis Capital Corp. is acting as exclusive placement agent for the offering. ArentFox Schiff LLP is acting as counsel to the Company for the offering. Kaufman & Canoles, P.C. is acting as counsel to Aegis for the offering.

A registration statement on Form S-3 (File No. 333-269644) relating to the offering of the securities was filed with the U.S. Securities and Exchange Commission (SEC) and declared effective by the SEC on March 21, 2023. The offering is being made only by means of a prospectus. A final prospectus supplement and accompanying prospectus describing the terms of the proposed transaction may be obtained, when available, on the SEC's website, www.sec.gov or by contacting Aegis Capital Corp., 1345 Avenue of the Americas, 27th Floor, New York, NY 10105, by telephone at (212) 813-1010 or by email at syndicate@aegiscap.com. This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Proceeds from the offering will be used, in part, to repay approximately $2.94 million of principal on the notes issued on May 22, 2024. In addition, all previously issued Series A convertible preferred stock has been converted to common stock effective July 10, 2024, and as of such date, the Company had approximately 2.63 million shares of common stock outstanding. Upon completion of the proposed offering, the Company will have no convertible debt or preferred stock outstanding, and less than $40,000 in debt outstanding.

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 October 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 being delivered to dealers across North America. Volcon debuted the Stag in July 2022 and entered the rapidly expanding UTV market and shipped its first production unit in February 2024. 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 Contacts

For 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

FORWARD-LOOKING STATEMENTS:

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act and other securities laws. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements. Forward-looking statements are not historical facts, and are based upon management's current expectations, beliefs and projections, many of which, by their nature, are inherently uncertain. Such expectations, beliefs and projections are expressed in good faith. However, there can be no assurance that management's expectations, beliefs and projections will be achieved, and actual results may differ materially from what is expressed in or indicated by the forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the forward-looking statements, including the risk factors described from time to time in the Company's reports to the SEC, including, without limitation the risk factors discussed in the Company's annual report on Form 10-K filed with the SEC on March 28, 2024. Readers are cautioned that it is not possible to predict or identify all the risks, uncertainties and other factors that may affect future results. No forward-looking statement can be guaranteed, and actual results may differ materially from those projected. Volcon undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. References and links to websites have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release. Volcon is not responsible for the contents of third-party websites.

SOURCE: Volcon ePowersports, Inc.

View the original press release on accesswire.com

FAQ

What is the size of Volcon's recent direct offering?

Volcon's recent direct offering is for 3,287,671 shares of common stock and/or pre-funded warrants, raising approximately $12 million.

At what price are Volcon's shares being offered?

Volcon's shares are being offered at $3.65 per share.

When is the closing date for Volcon's direct offering?

The transaction is expected to close on or about July 12, 2024, subject to customary conditions.

What will Volcon use the proceeds from the offering for?

Volcon will use part of the $12 million proceeds to repay approximately $2.94 million of principal on notes issued on May 22, 2024.

What will be Volcon's debt status post-offering?

Following the offering, Volcon will have no convertible debt or preferred stock and less than $40,000 in outstanding debt.

What is the SEC registration status of the offering?

The shares were registered with the SEC under Form S-3, effective March 21, 2023.