Volcon (VLCN) Enters $2.94M Securities Purchase Agreement

On May 20, 2023, Volcon (NASDAQ: VLCN) entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors listed on the signature pages thereto (individually, the “Investor” and collectively, the “Investors”) pursuant to which the Company agreed to issue and sell to the Investors in a private placement (i) senior non-convertible notes in an aggregate principal amount of $2,942,352.00 (the “Notes”), and (ii) five-year warrants to purchase approximately 10.1 million shares of Company common stock with an exercise price of $0.29 per share (the “Warrants”). The closing of the private placement will occur upon the satisfaction of customary closing conditions.

The Notes will be the senior unsecured obligations of the Company and were issued with an original issue discount of approximately 15%. The Notes will bear no interest unless an event of default has occurred, upon which interest accrues at 10.0% per annum. The Notes will mature on the one-year anniversary of the issuance date (the “Maturity Date”).

The Warrants will contain certain exercise limitations, providing that no exercise may be made if, after giving effect to the exercise, the holder, together with any of its affiliates, would own in excess of 4.99% of the Company’s outstanding shares of common stock.

Aegis Capital Corp. (“Aegis”) acted as exclusive placement agent for the private placement, and will receive upon closing cash compensation of 7.2% of the private placement, and expense reimbursement of $50,000.

The issuance of the Notes and the Warrants was made in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) for the offer and sale of securities not involving a public offering, and Regulation D promulgated under the Securities Act.

The Purchase Agreement, the Placement Agency Agreement, the Form of Note, and the Form of Warrant (collectively, the “Transaction Documents”), have been attached as exhibits to this Current Report on Form 8-K to provide security holders with information regarding their terms. Except for their status as contractual documents that establish and govern the legal relations between the parties with respect to the private placement described above, the Transaction Documents are not intended to be a source of factual, business or operational information about the parties. Representations and warranties may be used as a tool to allocate risks between the parties to the Transaction Documents, including where the parties do not have complete knowledge of all facts, instead of establishing these matters as facts. Furthermore, they may be subject to standards of materiality applicable to the contracting parties, which may differ from those applicable to investors. The assertions embodied in such representations and warranties are qualified by information contained in disclosure schedules that the parties exchanged in connection with signing the Transaction Documents. Accordingly, investors and security holders should not rely on such representations and warranties as characterizations of the actual state of facts or circumstances, because they were only made as of the date of the Transaction Documents and are modified in important part by the underlying disclosure schedules in the Transaction Documents. Moreover, information concerning the subject matter of such representations and warranties may change after the date of the Transaction Documents, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

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