VOLCON, INC. Item 8.01 Other Events.
Capitalized terms used in this Current Report on Form 8-K but not otherwise
defined herein shall have the respective meanings ascribed to them in the
Company's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and
Current Reports on Form 8-K, and all amendments thereto, that have been filed
with the
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements. In addition, from time to time, we or our representatives may make forward-looking statements orally or in writing. We base these forward-looking statements on our expectations and projections about future events, which we derive from the information currently available to us. Such forward-looking statements relate to future events or our future performance, including: our financial performance and projections; our growth in revenue and earnings; and our business prospects and opportunities. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as "may," "should," "expects," "anticipates," "contemplates," "estimates," "believes," "plans," "projected," "predicts," "potential," "intends," or "hopes" or the negative of these or similar terms. In evaluating these forward-looking statements, you should consider various factors, including: our ability to change the direction of the Company; our ability to keep pace with new technology and changing market needs; and the competitive environment of our business. These and other factors may cause our actual results to differ materially from any forward-looking statement. Forward-looking statements are only predictions. The forward-looking events discussed in this document and other statements made from time to time by us or our representatives, may not occur, and actual events and results may differ materially and are subject to risks, uncertainties and assumptions about us. We are not obligated to publicly update or revise any forward-looking statement, whether as a result of uncertainties and assumptions, the forward-looking events discussed in this document and other statements made from time to time by us or our representatives might not occur.
While we believe we have identified material risks, these risks and
uncertainties are not exhaustive. Other filings we make with the
Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We are under no duty to update any of these forward-looking statements after the date of this report to conform our prior statements to actual results or revised expectations, and we do not intend to do so.
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Forward-looking statements include, but are not limited to, statements about:
· our ability to generate revenues from sales or obtain additional
funding to market our vehicles and develop new products;
· our ability to successfully implement and effectively manage our
outsourced manufacturing, design and development model and achieve any
anticipated benefits;
· the ability of third-party manufacturers to produce our vehicles in
accordance with our design and quality specifications, with sufficient
scale to satisfy customers and within a reasonable cost;
· anticipated timing for the manufacture, design, development,
production, shipping and launch of our vehicles;
· the inability of our suppliers to deliver the necessary components for
our vehicles at prices and volumes acceptable to our third-party
manufacturers;
· our ability to establish a network of dealers and international
distributors to sell and service our vehicles;
· whether our vehicles will perform as expected;
· our facing product warranty claims or product recalls;
· our facing adverse determinations in significant product liability
claims;
· customer adoption of electric vehicles;
· the development of alternative technology that adversely affects our
business;
· the impact of COVID-19 on our business;
· increased government regulation of our industry;
· tariffs and currency exchange rates; and
· the conflict with Russia and the Ukraine and the potential adverse
effect it may have on the availability of batteries for our vehicles.
We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this report in the case of forward-looking statements contained in this report.
SUMMARY OF RISK FACTORS
Our business and ability to execute our business strategy are subject to a number of risks of which you should be aware before you decide to buy our securities, as more fully described in the section entitled "Risk Factors." You should consider these risks before you invest in our securities. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. Such risks include, but are not limited to:
Risks Related to the Company's Business, Operations, and Industry
· Our losses from operations could continue to raise substantial doubt regarding
our ability to continue as a going concern. Our ability to continue as a going
concern requires that we generate sufficient cash flows and/or obtain
sufficient funding to finance our operations.
· Our independent auditor registered public accounting firm has identified
material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses or we or our auditor identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and stock price.
· Our transition to an outsourced manufacturing, design and development business
model may not be successful, which could harm our ability to deliver products
and recognize revenue.
· We rely on third-party manufacturers, designers and developers, which subjects
us to risk of product delivery delays, reduced control over product costs and
quality control.
· Our third-party manufacturers may be unable to meet our growing sales and
delivery plans, which could harm our business and prospects.
· We are dependent on our third-party manufacturers, who are dependent on their
suppliers, some of which could be single-source suppliers. The inability of
these suppliers to deliver necessary components for our vehicles according to
our schedule and at prices, quality levels and volumes acceptable to us, or our
inability to efficiently manage these third-party manufacturers and their
suppliers could have a material adverse effect on our financial condition and
operating results. 3
· Our third-party manufacturers operate outside of
us to risks of international operations.
· We are utilizing a small number of vendors to assist us with the
manufacturing, development and design of our vehicles, including the chassis,
electrical systems, safety requirements, body components and accessories, and
the inability of these vendors to complete our respective design requirements
may delay our ability to release these vehicles for production, which could
have a material adverse effect on our financial condition and operating
results.· Increases in costs, disruption of supply, or shortage of materials could harm
our business.
· We have experienced delays and other complications in the design, manufacture,
launch and production ramp of our vehicles and our future planned vehicles,
which could harm our brand, business, prospects, financial condition and
operating results.
· We are an early-stage company and we have delivered a limited number of
vehicles to customers.
· The conflict with
availability of components used in the manufacturing of lithium ion batteries
that we use to power our vehicles.
· We are currently taking orders for the Grunt and pre-production orders for the
Stag and Brat, and if any of these vehicles fails to perform as expected, our
reputation could be harmed and our ability to develop, market and sell our
vehicles could be harmed.
· We may not succeed in establishing, maintaining and strengthening our brand,
which could materially and adversely affect customer acceptance of our
products, which could in turn materially affect our business, results of
operations or financial condition.
· An adverse determination in any significant product liability claim against us
could materially adversely affect our business, results of operations or
financial condition.
· The markets in which we operate are in their infancy and highly competitive,
and we may not be successful in competing in these industries as the industry
further develops. We currently face competition from new and established
competitors and expect to face competition from others in the future,
including competition from companies with new technology.
· We may need to defend ourselves against intellectual property infringement
claims, which may be time-consuming and could cause us to incur substantial
costs.
· Potential tariffs or a global trade war could increase our costs and could
further increase the cost of our products, which could adversely impact the
competitiveness of our products and our financial results.
· We sell our vehicles and accessories through a network of third parties, and
there is no assurance that we will be able to successfully build out this
network.
· Orders for vehicles are cancelable and there can be no assurance that all
orders will result in revenue being recognized.
· We, or our third-party vendors, may be unable to improve our existing products
and develop and market new products that respond to customer needs and
preferences and achieve market acceptance.
· We have limited experience servicing our vehicles, we intend to primarily
utilize third parties to service our vehicles, and if we are unable to address
the service requirements of our customers, our business could be materially
and adversely affected.
· Significant product repair and/or replacement due to product warranty claims
or product recalls could have a material adverse impact on our business,
results of operations or financial condition.
· Our success is dependent upon the success of the off-road vehicle industry and
upon consumers' willingness to adopt electric vehicles.
· We currently operate in an area that is not heavily regulated, and future
changes in government oversight may subject us to increased regulations, which
may increase our expenses.
· Our directors and executive officers will continue to exercise significant
control over us, which will limit your ability to influence corporate matters
and could delay or prevent a change in corporate control.
· We are party to certain agreements with our founders that may create a
conflict of interest for our board of directors in evaluating a potential
change of control transaction.
· Your ownership may be diluted if additional capital stock is issued to raise
capital, to finance acquisitions or in connection with strategic transactions.
· The duration and scope of the impacts of the COVID-19 pandemic remain
uncertain and have adversely affected our supply chain and may continue to
affect our operations, distribution, and demand for our products.
· We could be negatively impacted by cybersecurity attacks and are subject to
evolving privacy laws in
adversely impact our business and require that we incur substantial costs.
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Risks Related to our Common Stock
· If our stock price fluctuates, you could lose a significant part of your
investment.
· The terms of the Warrants and Convertible Notes impose additional challenges on
our ability to raise capital.
· The issuance of our common stock in connection with the Company's outstanding
warrants, including the Warrants, the Placement Agent Warrant and the 2022
Underwriter Warrant, and the Convertible Notes, could cause substantial
dilution, which could materially affect the trading price of our common stock.
· The sale of our common stock by our stockholders, or the perception that stock
sales may occur, could cause the price of our common stock to decline.
· We may not be able to maintain our listing on the Nasdaq, which could have a
material adverse effect on us and our stockholders.
· If securities or industry analysts do not publish research or reports about us,
or if they adversely change their recommendations regarding our common stock,
then our stock price and trading volume could decline.
· As an "emerging growth company" under the JOBS Act we are permitted to, and
intend to, rely on exemptions from certain disclosure requirements.
Risk Factors
Investing in our common stock involves a high degree of risk. You should carefully consider each of the following risks, together with all other information set forth in this report, including the financial statements and the related notes, before making a decision to buy our common stock. If any of the following risks actually occurs, our business could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.
Risks Related to the Company's Business, Operations, and Industry
Our losses from operations could continue to raise substantial doubt regarding our ability to continue as a going concern. Our ability to continue as a going concern requires that we generate sufficient cash flows and or obtain sufficient funding to finance our operations.
Based on our current operating plan, we did not have sufficient existing cash
and cash equivalents to fund our operations for the twelve months following the
filing of the
Subsequent to
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Our independent auditor registered public accounting firm has identified material weaknesses in our internal control over financial reporting. If we are unable to remediate these material weaknesses or we or our auditor identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and stock price.
In connection with the preparation and audit of our consolidated financial
statements for the year ended
· Inadequate segregation of duties within account processes due to limited
personnel; and
· Insufficient formal written policies and procedures for accounting, IT,
financial reporting and record keeping.
These material weaknesses were also identified in connection with the
preparation and audit of our consolidated financial statements for the year
ended
Our transition to an outsourced manufacturing, design and development business model may not be successful, which could harm our ability to deliver products and recognize revenue.
On
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We rely on third-party manufacturers, designers and developers, which subjects us to risk of product delivery delays, reduced control over product costs and quality control.
Effective as of
Our reliance on third-parties for the manufacture, design and development of our vehicles exposes us to a number of risks which are outside our control, including:
· unexpected increases in manufacturing costs;
· interruptions in vehicle deliveries if a third-party vendor is unable to
complete production or design in a timely manner; and
· inability to control quality of finished products.
Our reliance on third-parties reduces our control over the manufacturing, design
and development processes, including reduced control over quality, product costs
and product supply and timing. We may experience delays in shipments or issues
concerning product quality from our third-party vendors, and such supply chain
disruptions and delays have been exacerbated by the COVID-19 pandemic. If any of
our third-party vendors suffer interruptions, delays or disruptions in
manufacturing, designing or developing our products, including by reason of the
COVID-19 pandemic, natural disasters, work stoppages or capacity constraints,
our ability to ship products to dealers and
Our third-party manufacturers may be unable to meet our growing sales and delivery plans, which could harm our business and prospects.
Our sales growth and delivery plan contemplates achieving and sustaining significant increases in vehicle deliveries. Our ability to achieve this plan depends upon a number of factors, including our ability to identify third-party manufacturers who can meet our forecasted demand while maintaining our desired quality levels and optimize design and product changes. Although we believe that the third-party manufacturers we have contracted with have the ability to meet our forecasted demand, there is no assurance that they we will be successful in these efforts. If we are unable to realize our sales and delivery plan, our brand, business, prospects, financial condition and operating results could be materially damaged.
We are dependent on our third-party manufacturers, who are dependent on their suppliers, some of which could be single-source suppliers. The inability of these suppliers to deliver necessary components for our vehicles according to our schedule and at prices, quality levels and volumes acceptable to us, or our inability to efficiently manage these third-party manufacturers and their suppliers could have a material adverse effect on our financial condition and operating results.
Our vehicles contain numerous purchased parts that our third-party manufacturers either (a) source globally from direct suppliers, some of whom could be single-source suppliers, or (b) manufacture themselves from components or materials. Any significant unanticipated demand would require our third-party manufacturers to procure or manufacture additional components in a short amount of time. While we believe our third-party manufacturers would be able to secure additional or alternate sources of supply for most of our components and raw materials in a relatively short time frame, there is no assurance that they will be able to do so or develop their own replacements for certain highly customized components of our products.
If our third-party manufacturers encounter unexpected difficulties with key suppliers, and if they are unable to fill these needs from other suppliers, we could experience production delays and potential loss of access to important technology and parts for producing, servicing and supporting our vehicles. This limited, and in many cases single source, supply chain exposes our third-party manufacturers and us to multiple potential sources of delivery failure or component shortages for the production of our vehicles. The loss of any single or limited source supplier or the disruption in the supply of components from these suppliers could lead to design changes and delays in product deliveries to our customers, which could hurt our relationships with our customers and result in negative publicity, damage to our brand and reputation, and a material and adverse effect on our business, prospects, financial condition and operating results.
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Our third-party manufacturers operate outside of
Our third-party manufacturers operate outside of
Products that we have manufactured for us in
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