Volcon, Inc. (NASDAQ:VLCN), a manufacturer specializing in motor vehicles and passenger car bodies, has reported an ongoing inquiry related to a recent reverse stock split.
On November 19, 2024, the company completed a one-for-eight reverse stock split of its common stock. This corporate action typically reduces the number of shares in circulation by consolidating multiple shares into one.
Following the reverse stock split, Volcon intended to round up fractional shares, issuing full shares to stockholders who would otherwise receive a fraction. However, the Depository Trust & Clearing Corporation (DTCC), representing brokerage firms, notified Volcon that 188,950 additional shares would need to be issued to address these fractional shares.
Volcon has expressed concerns over the accuracy of this figure, given the historical shareholder data. The company is aware of similar discrepancies experienced by other firms that have conducted reverse stock splits. As a result, Volcon has initiated an examination of the calculations provided by DTCC.
During the investigation, Volcon has decided to withhold the issuance of any shares related to the fractional shares in question. This delay could potentially lead to liability if it is determined that the company is obligated to distribute these shares.
The company's management, including Chief Financial Officer Greg Endo, is actively addressing the situation.
The above news is based on an SEC filing.
In other recent news, Volcon Inc., known for its electric off-road vehicles, reported Q1 revenues of $1.03 million, primarily driven by the success of the Grunt EVO and the Brat eBike. However, Volcon also registered a substantial net loss of $26.0 million, largely due to a $19.8 million loss recognized for warrant liabilities.
Volcon has also announced the early production and launch of its HF1 Electric UTV, ahead of the original first-quarter 2025 production schedule. This high-powered utility task vehicle is touted as the fastest accelerating vehicle in its class, highlighting Volcon's commitment to sustainable electric vehicles for outdoor activities.
InvestingPro Insights
Volcon's ongoing inquiry into the reverse stock split complications comes at a challenging time for the company, as revealed by recent InvestingPro data. The company's market capitalization stands at a modest $2.48 million, reflecting its current struggles. This is further emphasized by the stock's significant decline, with InvestingPro Tips highlighting that Volcon's stock price has fallen dramatically over the past year, three months, and six months.
The company's financial health presents a mixed picture. While Volcon holds more cash than debt on its balance sheet, it is also quickly burning through cash, according to InvestingPro Tips. This cash burn rate is particularly concerning given the company's negative gross profit margin of -415.56% in the last twelve months, indicating significant challenges in its core operations.
Despite these headwinds, there are some positive indicators. Volcon's revenue growth is notable, with a 120.72% increase in the most recent quarter. Analysts anticipate continued sales growth in the current year, as noted in the InvestingPro Tips. However, the company remains unprofitable, with a negative operating income margin of -769.0% over the last twelve months.
For investors seeking a more comprehensive analysis, InvestingPro offers additional insights with 17 more tips available for Volcon, providing a deeper understanding of the company's financial position and market performance.
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