Volcon, Inc. Form 10-K

 false 2023 FY 0001829794

 2024-03-27

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 2023-10-01

 Table
of Contents

 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM

 (Mark One)

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31,
2023

 OR

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from ________ to__________

 Commission file number: 001-40867

 Volcon, Inc.

 (Exact Name of Registrant as Specified in Its Charter)

 Delaware

 84-4882689

 (State or Other Jurisdiction of

 Incorporation or Organization)

 (I.R.S. Employer

 Identification No.)

 3121 Eagles Nest Street, Suite 120, Round Rock, TX

 78665

 (Address of Principal Executive Offices)

 (Zip Code)

 (512) 400-4271

 (Registrant's Telephone Number, Including Area
Code)

 Securities registered pursuant to Section 12(b)
of the Act:

 Title of each class

 Trading symbol

 Name of each exchange on which registered

 Common Stock

 VLCN

 The NASDAQ Stock Market LLC

 Securities registered pursuant to Section 12(g)
of the Act: None

 Indicate by check mark if the registrant is a well-known seasoned issuer,
as defined in Rule 405 of the Securities Act. Yes No

 Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes No

 Indicate by check mark whether the registrant:
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No

 Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
 No

 Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and
"emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large Accelerated Filer

 Accelerated Filer

 Non-Accelerated Filer

 Smaller Reporting Company

 Emerging Growth Company

 If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.

 Indicate by check mark whether the registrant
has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.

 If securities are registered pursuant to Section
12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction
of an error to previously issued financial statements.

 Indicate by check mark whether any of those error
corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's
executive officers during the relevant recovery period pursuant to § 240.10D-1(b).

 Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 As of March
27, 2024, there were 18,748,955 outstanding shares of our common
stock. The aggregate market value of shares of common stock held by non-affiliates as of June 30, 2023 was $ 13,419,273
based on the closing sale price as reported by the NASDAQ Stock Market.

 DOCUMENTS INCORPORATED BY REFERENCE

 Portions of the registrant's proxy statement
related to its 2024 Annual Stockholders' Meeting to be filed subsequently are incorporated by reference into Part II of this Form
10-K. Except as expressly incorporated by reference, the registrant's proxy statement shall not be deemed to be part of this report.

 Page

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions and Director Independence

 Item 14.

 Principal Accountant Fees and Services

 Item 15.

 Exhibit and Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 Index to Exhibits

 Signatures

 i

 Special Note Regarding Forward-Looking
Statements

 This Form 10-K, together with other statements
and information publicly disseminated by our company, contains certain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with
these safe harbor provisions.

 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; our product
development and production releases; 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," 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 sections of this Form 10-K describe additional factors that could adversely impact
our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties
emerge from time to time, and it is not possible to predict all risks and uncertainties, nor can we assess the impact of all factors on
our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained
in any forward-looking statements.

 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 Form 10-K to conform our prior statements to actual results or revised expectations, and we do not intend
to do so.

 Forward-looking statements include, but are not
limited to, statements about:

 our ability to generate revenues from sales, generate cash from operations, 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, 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 on the timeline we expect;

 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;

 increased government regulation of our industry;

 tariffs and currency exchange rates;

 the conflict with Russia and Ukraine and the potential adverse effect it may have on the availability of materials used in the manufacturing of batteries for our vehicles; and

 our ability to maintain our listing on Nasdaq.

 ii

 ITEM 1. BUSINESS

 Overview

 We are an all-electric, off-road
powersports vehicle company developing electric two and four-wheel motorcycles and utility terrain vehicles, or UTVs, also known as side-by-sides,
along with a line of upgrades and accessories. In October 2020, we began building and testing prototypes for our future offerings with
two off-road motorcycles – the Grunt and the Runt. Our motorcycles feature unique frame designs protected by design patents. Additional
utility and design patents have been filed for other aspects of Volcon's vehicles.

 Initially, we began to sell and distribute the
Grunt and related accessories in the United States on a direct-to-consumer sales platform. However, we terminated our Grunt direct-to-consumer
sales platform in November 2021. Beginning in November 2021, we began negotiating dealership agreements with powersports dealers to display
and sell our vehicles and accessories. Customers can now, or will soon be able to, buy our vehicles and accessories directly from a local
dealership. Some of these dealers will also provide warranty and repair services to customers. As of March 15, 2024, we have 103 active
dealers. Dealers can order any of our available products provided they are current on their accounts receivable and are within their established
credit limit. We are offering dealers payment terms 30 to 90 days to make larger purchases of our vehicles. We have entered into an accounts
receivable factoring arrangement to allow the Company the ability to generate cash for working capital. We have agreements with third
party financing companies to provide financing to qualified customers of each dealer. There is no recourse to the Company or the dealer
if the dealer's customer defaults on the financing agreement with the third party.

 We sell our vehicles internationally
through importers. Each importer buys vehicles by the container and sells vehicles and accessories to local dealers or directly to consumers.
Local dealers or the importer will provide warranty and repair services for vehicles purchased in their country. In October 2023, we made
a decision to postpone expanding our dealer network in Canada for the foreseeable future and we have terminated the employment of our
Canadian regional sales managers. As of March 15, 2024, we have signed agreements with six importers in Latin America, one importer for
the Caribbean Region, collectively referred to herein as the LATAM importers, one importer in New Zealand, and one importer in Australia
to sell our vehicles and accessories in their assigned countries/markets. In 2024, we expect to expand our global sales of our vehicles
and accessories beyond our current distributor base.

 In June 2022, we signed an
exclusive distribution agreement with Torrot Electric Europa S.A., referred to herein as Torrot, to distribute their electric motorcycles
for youth riders in Latin America. In October 2022, we signed an expanded agreement with Torrot, which superseded the June 2022 agreement,
to also be the exclusive distributor of Torrot and Volcon co-branded youth electric motorcycles in the U.S. as well as Latin America.
Finally, in December 2022, we signed an expanded agreement with Torrot to be the exclusive distributor of Volcon co-branded youth electric
motorcycles in Canada. In June 2023, we wrote down all remaining Torrot branded inventory in the amount of $84,000. In December 2023 we
notified Torrot that we were terminating our agreements due to continued lower than expected sales at significantly discounted pricing.
In 2023, we wrote down the Volcon co-branded Torrot youth motorcycles by $2,674,352 to reduce their cost to the estimated net realizable
value due to lower than expected sales. We have agreed to give Torrot a total of 1,000 Volcon branded Torrot motorcycles originally purchased
for $1.8 million, an up front payment of $370,000 and an additional $1.7 million to be paid out at $100,000 over 17 months beginning in
April 2024 in exchange for unfulfilled 2023 and 2024 unit purchases. As of December 31, 2023, we have Volcon Youth inventory of approximately
$239,935, after reducing these to the estimated net realizable value, of Volcon branded Torrot motorcycles and accessories which we intend
to liquidate and we have agreed to give Torrot sales rights in the U.S., Canada and LATAM after June 30, 2024.

 In July 2022, we expanded
our offerings with the introduction of the first of our Volcon UTV models, the Stag, which we initially anticipated would be available
for delivery to customers in the fourth quarter of 2023, followed by additional models of the Stag expected in 2024 and 2025. We delivered
the first Stag to a customer in February 2024. The Stag is being manufactured by a third party and incorporates electrification units,
which include batteries, drive units and control modules provided by General Motors. Beginning in June 2022, we took non-binding pre-production
orders which were cancelable prior to delivery. In the third quarter of 2023 we canceled all of the original pre-production orders due
to the introduction of multiple models and new pricing. We began taking new pre-production orders for the newly introduced models in the
third quarter of 2023.

 In August 2022, we ceased
manufacturing of the Grunt and we outsourced the manufacturing of the remaining Grunts and the 2023 Grunt EVO to the same third party
manufacturer as the Stag. The 2023 Grunt EVO has replaced the Grunt and has a belt drive rather than a chain drive as well as an updated
rear suspension. We began selling the Grunt EVO in the third quarter of 2023.

 We began taking pre-orders
for an E-Bike, the Brat, in September 2022 and shipments to customers began in the fourth quarter of 2022. The Brat is being manufactured
by a third party. In January 2023, we began selling the Brat directly to consumers through our website. Consumers who order the Brat from
our website can have the Brat shipped to their specified destination.

 In November 2022, we finalized
an agreement for the same third party that manufactures the Stag and Grunt EVO to manufacture the Runt LT. We received prototypes of the
Runt LT in the first quarter of 2023. We are evaluating the market for the Runt LT and will determine whether to proceed with production
in the first half of 2024.

 The estimated fulfillment
of all orders we have received assumes that our third party manufacturers can successfully meet our order quantities and deadlines. If
they are unable to satisfy orders on a timely basis, our customers may cancel their orders.

 In September and October 2023,
we reduced our headcount in several departments to reduce costs and we continue to evaluate other cost reduction opportunities.

 Our Industry

 T he powersports
industry is made up of on-road and off-road motorcycles, scooters, ATVs (all-terrain vehicles), UTVs, PWC (personal watercraft) and snowmobiles.
 The ATV market, in which a single rider sits on top of a four-wheeled vehicle (as opposed to sitting inside a UTV), is not a market
we currently intend to pursue but will continue to evaluate our lineup of vehicles in the future. We have also developed an electric bicycle,
or eBike, the Brat, primarily designed for on-road use but can also be ridden off-road.

 While we are focusing solely on off-road for our
motorcycles and UTVs, we are evaluating requirements in other countries where our vehicles will need to be homologated for on-road and
off-road use in order to sell them there. We are also considering homologation kits that customers could purchase to allow them to use
our vehicles both on-road and off-road depending on federal, state and local government rules and regulations.

 Outdoor recreation is a major driver of the American
economy. In 2022, the U.S. Bureau of Economic Analysis, or the BEA, found that outdoor recreation drives $563 billion of the current-dollar
gross domestic product for the U.S. The BEA noted that motorcycles and ATVs make up $11.5 billion of that total.

 According to Stratview Research – Powersports
Market Research Report, the powersports industry grew by 10% in terms of units in 2020, its highest growth rate ever achieved. The long-term
outlook for growth and demand for powersports, according to the report, especially off-road vehicles, or ORVs, and power watercraft, or
PWCs is positive. The Stratview Research report estimates the powersports market to grow at a compound annual growth rate, or CAGR, of
5.7% during 2022 to 2027 to reach a value of

 $47.9 billion by 2027.

 According to a report by Allied Market Research,
the global ATV and UTV market was valued at $7.6 billion in 2017, and is projected to reach $11.95 billion by 2027, registering a CAGR
of 6.7% from 2020 to 2027.

 According to Market Reports World, the global
off-road motorcycles market size is estimated to grow at CAGR of almost 8% with new vehicle sales of 124,950 units during the
forecast period 2022 to 2027.

 According to the PowerSports
Business 2023 Market Data Book:

 In the U.S., UTV sales were just under 550,000 units in 2022, according to leading industry research firm Power Products Marketing. New motorcycle sales in 2022, meanwhile, were 733,537 units, according to the Motorcycle Industry Council. Reversing a trend where in 2021 where more new UTVs were sold at retail in 2021 than new motorcycles.

 According to dealership feedback, turnover of new unit inventory in 2022 at dealerships was 4.6 turns (compared to 7.5 turns) average. Similarly, new unit gross margin percentage at the dealership level was 17.1% on average during 2022 (comparted to 17.4% in 2021).

 Accessory sales for UTVs on average are $977 worth of
 accessories at the time of a UTV sport purchase in 2022, Lightspeed data shows.

 According to S&P Global Mobility, 2022 new and used UTV registrations were 318,216 compared to 334,000 in 2021, showing continued post-pandemic strength in the segment.

 While inflationary pressures may have impacted
demand, we believe the new culture of escape and outdoor activities will continue to drive off-road powersports recreation. We believe
there are very few all-electric off-road powersports companies, and traditional powersports companies have only recently started making
electric products, so significant data on off-road electric vehicles does not exist yet.

 Our Products

 We feature motorcycle and UTV products that are
all-electric and primarily designed for off-road use, in addition to a Class 2 eBike, the Brat, that can be used on or light off-road.
The off-road market is growing faster than on-road and on-road products require costly levels of certification, homologation and compliance
with the Department of Transportation (DOT), the National Highway Traffic Safety Administration (NHTSA) and other government regulators.
For our motorcycles and UTVs, we are solely focusing on developing them for the off-road market. Due to these regulations, our motorcycles
and UTVs are not legal for on-road use without homologation by customers who may be able to purchase parts or kits from other third parties.
All vehicles other than the Brat come or will come with a warning label stating "This vehicle is designed and manufactured for off-road
use only. It does not conform to federal motor vehicle safety standards and operation on public streets, roads, or highways is illegal",
and therefore our vehicles cannot be legally registered for on-road use in any state in the U.S and in many countries without the customer
homologating the vehicle. In addition to powersports vehicles, we source, market and sell accessories and upgrades and continue to source
new accessories and upgrades. These do or will feature parts designed to increase performance or appearance, in addition to practical
add-ons to equip Volcon vehicles for hunters, anglers, ranchers and farmers.

 The Stag

 In July 2022, we publicly introduced a prototype
of the Stag. We began taking pre-production orders from dealers in June 2022 and consumers in July 2022. These original pre-production
orders were canceled in the third quarter of 2023 and new pre-production orders were taken from dealers and consumers. The consumer pre-production
orders will be transferred to dealers located near the consumer. We delivered our first Stag to the Army Corps. of Engineers in February
2024. Pre-production orders of the Stag are non-binding and cancelable prior to delivery. The Stag will be Volcon's first utility/sport
UTV with a 64" width to ensure it is able to operate in states with 65"-maximum-width trails.

 The 2024 Stag LTD is our first UTV model launched
and will seat up to four people, with folding rear seats, a four point harness system, high performance shocks and tires, on demand all-wheel
drive, variable power steering, and a full line of accessories.

 We expect to introduce additional UTV models in
the future but the timing and specifications have not yet been determined.

 We also expect to introduce a larger, longer range
UTV (to be named) in the future, which will be the largest, most powerful model in the Volcon line. We are designing this vehicle to have
superior range and speed, but still be able to haul and tow far more than a traditional UTV. The timing of the release of this vehicle
has not been determined.

 Our ability to release new future products is dependent
on the success of our current model and our ability to receive future financing of which there is no assurance.

 The Grunt EVO

 Our first product to market, the Grunt, began shipping
to customers in the third quarter of 2021. The Grunt EVO was introduced in 2023 and we began selling it in September 2023. The Grunt EVO
is different from the Grunt as it has a belt drive rather than a chain drive, an upgraded rear shock and rear suspension, and a new seat
design and is available in three different colors. There are also aftermarket accessories available.

 The Grunt EVO's frame, low seat height and
oversize tires are designed to make it look like the fat tire bikes of the 1970s and '80s. These unique elements of the Grunt EVO
are not just for styling, but we believe they help make it easier to ride as compared to other off-road motorcycles on the market. The
low seat height and large tires are designed to make the Grunt EVO stable at all speeds on all surfaces in the off-road environment. The
electric drivetrain has no clutch and no gears, making it easy for almost anyone to operate.

 Although the Grunt EVO can be used as delivered,
we have developed an app, which can be downloaded at no additional cost, that we believe will enhance the riding experience. The Grunt
EVO has a small, optional, dash with limited data; however, the rider can use their smartphones and the app (subject to the rider's
cellular connectivity) as a dashboard by mounting it on the handlebars. The app makes it easier for users to set ride modes, check battery
status, and update the bike's firmware.

 The Grunt EVO is designed for family off-road adventures,
work on the farm or fun transport around private land. Its range can be up to 35 miles (with an optional second battery that provides
an additional 35 miles) in its "explore" mode setting and it can be completely charged in less than three hours from a standard
wall outlet.

 The Runt LT

 The Runt LT, which is a smaller version of the
Grunt EVO, is better suited for small statured riders, more compact properties and trails, or as a pit bike at race events, while still
delivering robust off-road capabilities. Unlike the Grunt EVO, the Runt LT will only have a display to show the rider certain aspects
of the vehicle such as speed, battery charge and mode. The app will not be available in the initial version of the Runt LT but could be
developed for future models.

 Like the Grunt EVO, the Runt LT's large tires
and low-slung chassis will make it easier to ride than traditional off-road motorcycles. The Runt LT will have a range of up to 35 miles
in its "explore" mode setting and charges in less than three hours from a standard wall outlet. We are currently evaluating
the market for the Runt LT to determine if we will produce it. We expect to make this decision in the first half of 2024.

 The Brat

 Similar to the lineup of Volcon motorcycles, the
Brat has a low seat height, large tires and hydraulic front and rear disc brakes. The Brat is a Class 2 eBike capable of achieving 20
mph maximum speed from throttle assistance. The Volcon app will also work with the Brat provided the rider has downloaded the app to their
smartphone and has cellular connectivity. We began selling the Brat in December 2022.

 Assembly and Manufacturing

 We have outsourced the manufacturing of all of
our vehicles to third parties. The Brat is manufactured by a supplier in China and the Grunt EVO, Runt and Stag are or will be manufactured
by a supplier in Mexico. The Volcon Youth motorcycles were manufactured by Torrot in Spain.

 We provide a one-year warranty on the Grunt EVO,
Volcon Youth motorcycles and the Brat, and a two-year warranty on the battery pack subject to a specified number of charging cycles. We
expect the warranty for our other motorcycles will be consistent with these warranties. Warranty for the Brat and Volcon Youth motorcycles
is provided by the manufacturer provided that we timely submit the claim to them. The warranty for the Stag is also one year on parts
and labor and two years on the battery. Certain parts will be warranted by the part manufacturer or the vehicle manufacturer whereas other
parts will be warranted by the Company.

 We accrue warranty reserves at the time a vehicle
is delivered to the customer. Warranty reserves include our best estimate of the projected cost to repair or to replace any items under
warranty, based on actual warranty experience as it becomes available and other known factors that may impact our evaluation of historical
data. We review our reserves quarterly to ensure that our accruals are adequate in meeting expected future warranty obligations, and we
will adjust our estimates as needed. Warranty expense is recorded as a component of cost of revenues in the statement of operations. The
warranty obligation is classified as a current liability on our balance sheet.

 Sales and Marketing

 Through March 15, 2024, we have 103 dealers covering
28 states. We are currently negotiating additional dealership agreements with retail partners to display and sell our vehicles and accessories.
Some of these dealers will also provide warranty and repair services to our customers. Customers can also purchase the Brat and Volcon
Youth motorcycles and related accessories on our website.

 We anticipate our vehicles and accessories will
be sold globally in a three-phase rollout of export sales– Latin American importers started in 2022, New Zealand in 2023 and Australia
in 2024, subject to meeting each countries homologation requirements, if any. Export sales are expected to be executed through individual
importers in each country that purchase vehicles from us by the container. Each importer is expected to sell vehicles to local dealers
or directly to customers. Local dealers are intended to provide warranty and repair services for vehicles purchased within their markets.

 Intellectual Property

 Our success depends, at least in part, on our ability
to protect our core technology and intellectual property. To accomplish this, we currently rely on a combination of trade secrets, including
know-how, employee and third party non-disclosure agreements, and other contractual rights to establish and protect our proprietary rights
in our technology.

 Our industrial designs are protected by design
patents. In addition, we intend to file for additional utility patents. There is no assurance that we will be granted any such patents.
We do not know whether any patent applications will result in the issuance of patents or whether the examination process will require
us to narrow our claims. Even if granted, there can be no assurance that our issued patents or new patent applications will provide us
with protection.

 We have registrations for the trademarks VOLCON
and GRUNT in the U.S. We have also applied to register additional trademarks – including VOLCON, VOLCON BRAT, VOLCON STAG, GRUNT
EVO, EMPOWERING ADVENTURE, RUNT, VOLCON RUNT, STAG, and VOLCON STAG - in the U.S., Canada, New Zealand, Australia and certain additional
countries in Latin America, and many of these trademarks are now allowed or registered in these countries. We have resolved some
conflicts and potential conflicts that have arisen with regard to the use and registration of our trademarks through coexistence agreements
and the submission of arguments. We have received notice from an entity in Brazil who has opposed our applications for trademarks
including the word VOLCON, but we believe the trademarks and the goods being sold under them are not similar and there is no potential
for confusion.

 We have also identified that in Australia, VOLCON
is similar to another trademark that does not appear to be in use. We have filed a removal application to remove the use of the other
trademark so that we can use VOLCON. However, there is no guarantee that our application to remove will be accepted. Our efforts to secure
trademark registrations for VOLCON and other trademarks referenced above are ongoing and we may encounter resistance from other companies,
particularly as we expand into additional territories. If we receive objections from other entities and are unsuccessful in obtaining
agreements or otherwise resolving the matters with these entities, we will need to consider the use of different trademarks for our Company
and our products.

 Competition

 There are dozens of manufacturers that sell off-road
motorcycles, UTVs and eBikes in the U.S. and even more globally. The markets for powersport vehicles and eBikes are highly competitive
based on a number of factors, including innovation, performance, price, technology, product features, styling, fit and finish, brand recognition,
quality and distribution. We believe our ability to compete successfully in these markets depends on our ability to capitalize on our
competitive strengths and build brand recognition.

 Many companies, which have greater financial and
marketing resources than Volcon, make electric street motorcycles, including Zero Motorcycles. Some companies make electric UTVs as part
of their product line. For example, Polaris has a joint venture with Zero Motorcycles to help them design dedicated electric UTVs, the
first product of which began selling in 2023. Many companies, like Super 73, make and sell eBikes and have a stronger established brand
name and product line.

 Government regulations

 We have focused on the off-road-only portion of
the market because it is free of many of the homologation issues and highway certifications required to produce and sell an on-road vehicle.
In some states, off-road vehicles do have legislative restrictions, but they are related to noise and exhaust emissions, two things our
vehicles do not produce.

 Federal, state, and local governments have promulgated
and/or are considering promulgating laws and regulations relating to the safety of our products. In the U.S., the Consumer Product Safety
Commission (CPSC) has federal oversight over product safety issues related to off-road vehicles and eBikes. We believe that our products
comply with all applicable CPSC safety standards as well as all other applicable safety standards in the U.S.

 The assembly, use, storage, transport and disposal
of battery packs is subject to extensive regulation. Complying with these requirements involves substantial costs, and any failure to
do so may result in heavy fines or other restrictions on our operations. Additionally, we may be responsible for the recycling and proper
disposal of expended batteries from our vehicles. We may enter into agreements with third parties to manage such recycling and disposal;
however, we may be found liable for any failures in compliance by these third parties and subject to fines or remediation liabilities,
which costs may be substantial.

 We intend to sell and distribute our vehicles
internationally through international distributors. As such, we will be subject to the local laws of each jurisdiction in which we sell
our vehicles. These regulations may result in increased costs and expenses, which may materially and adversely affect our business, results
of operations or financial condition.

 Human Capital

 Volcon Mission

 People are at the core of our DNA. Our mission
is to build industry leading products that connect people to outdoor experiences through the intentional blending of leading technology
and design. Our vision is to amplify the powersports experience for all. Our values are building the future of powersports. Our employees
recognize that everyone is someone's customer, which is why our goal is for each employee at Volcon is to treat others as you would
want to be treated.

 Professional Employer Organization

 Since inception through December 31, 2022, we have
used professional employer organizations ("PEOs") to outsource our employee base, including processing of payroll and administration
of benefits. Beginning January 1, 2023, we discontinued the use of a PEO and have hired a third party payroll processing service and a
third party administrator of benefits. As of December 31, 2023, in the U.S we have 35 full-time employees and one part-time employee and
we do not have any employees outside of the U.S. Currently, our employees have not chosen representation by a labor union. We
also occasionally engage the services of independent contractors for special projects.

 Our employees and contractors focus on customer
care, developing our products, and building our marketing channels. We believe we offer competitive benefits and training programs to
develop employees' expertise, performance, and engagement, while implementing corporate policies to provide a safe, harassment-free
work environment. This work environment is guided by principles of fair and equal treatment and prioritizes effective communication and
employee engagement.

 Employee Engagement

 We are committed to building a strong culture with
high levels of employee engagement. We hold quarterly all-hands and ad hoc meetings where management discusses various topics with employees
including operational updates, vehicle development, financing activities, company policies and safety. Management is also committed to
being available to discuss any employee concerns on a one-on-one basis. We believe that our employees are our greatest asset and are striving
to consistently evaluate our progress in developing and maintaining engagement.

 Available Information

 Our website is at www.volcon.com.
We make available, free of charge, on our corporate website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports
on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as soon as reasonably practicable after they are electronically filed with the SEC. The SEC
maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically
with the SEC at www.sec.gov. Information contained on our website does not, and shall not be deemed to, constitute part of this Annual
Report on Form 10-K. Our reference to the URL for our website is intended to be an inactive textual reference only.

 ITEM 1A 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 Annual
Report on Form 10-K, including the financial statements and the related notes, in evaluating an investment in 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. Additional risks not presently known to us or that we currently deem immaterial may also
impair our business operations.

 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 obtain sufficient
funding to finance our operations.

 To date we have funded operations
through equity and debt offerings. As of December 31, 2023, we have an accumulated deficit of $120.8 million.

 In February and March 2024, certain holders of
the May 2023 Convertible Notes issued in May 2023 converted approximately $7.4 million of principal to common stock. In March 2024, the
holders exchanged the remaining May 2023 Convertible Notes of $24.7 million for Series A convertible preferred stock with a $1,000 per
share value and an initial conversion price of $1.33 per share for common stock. All covenants from the Convertible Notes were terminated
upon this exchange. In March 2024, certain holders of the Series A convertible preferred stock converted $2.3 million shares to 1.7 million
shares of common stock.

 Management anticipates that our cash on hand as
of December 31, 2023 plus the cash expected to be generated from operations will not be sufficient to fund planned operations and maintain
required cash balances for the Convertible Notes beyond one year from the date of the issuance of the financial statements as of and for
the year ended December 31, 2023. There can be no assurance that we will not require additional funding to support our operations. There
can be no assurance that such additional funding, if needed, would be available to the Company on acceptable terms, or at all. These factors
raise substantial doubt regarding our ability to continue as a going concern.

 The material weaknesses in our internal control over financial
reporting identified in our 2020 audit have not been remediated. 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.

 The material weaknesses identified by our independent
registered public accounting firm in our internal control over financial reporting in our 2020 audit have not been remediated as of December
31, 2023. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that
there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements will not be
prevented or detected on a timely basis. These material weaknesses are as follows:

 Inadequate segregation of duties within account processes due to limited personnel

 Insufficient formal written policies and procedures for accounting, IT, financial reporting and record keeping

 In addition to hiring more finance and accounting
personnel in 2021 to improve our segregation of duties, through 2023, we have made further progress towards remediating these material
weaknesses. We have hired more experienced accounting and finance personnel. We have prepared some formal written policies and procedures
for accounting, IT, and financial reporting and record keeping. We have also started the process of documenting our internal controls.
However, we have not fully completed documentation or testing of these policies, procedures, and internal controls.

 While we believe these efforts have improved the
internal control over financial reporting during 2023, they did not fully remediate the material weaknesses as we have not fully documented
all of our policies or procedures and we have not performed any testing of our internal controls.

 We cannot assure you that the measures we have
taken to date and may take in the future, will be sufficient to remediate the control deficiencies that led to our material weaknesses
in internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. The effectiveness
of our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used
in decision making, assumptions about the likelihood of future events, the possibility of human error and the risk of fraud. If we are
unable to remediate the material weakness, our ability to record, process and report financial information accurately, and to prepare
financial statements within the time periods required of public companies could be adversely affected which, in turn, may adversely affect
our reputation and business and the market price of our common stock. In addition, any such failures could result in litigation or regulatory
actions by the SEC or other regulatory authorities, loss of investor confidence, delisting of our securities and harm to our reputation
and financial condition, or diversion of financial and management resources from the operation of our business.

 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.

 In March 2022, we signed an agreement with a manufacturer
in China to develop and manufacture the Brat, our first eBike. We provided this vendor with our specifications and design drawings, and
they developed prototypes and the manufacturing process to build the Brat at a cost that was acceptable to us. We launched the Brat in
December 2022 and have sold the Brat throughout 2023 and expect to continue to sell the Brat in 2024.

 In June 2022, we signed a distribution agreement
with Torrot Electric Europa, S.A. ("Torrot") to distribute their youth motorcycles through our LATAM distributors. In October
2022, we signed an exclusive distribution and co-branding agreement with Torrot, which replaces the original distribution agreement and
allows Volcon to co-brand Torrot's youth motorcycles using the Volcon name and branding in the U.S. and Latin America. This was
expanded to Canada through a separate agreement signed in December 2022. These products are manufactured by Torrot in Spain. Due to lower
than expected sales of youth motorcycles, in 2023 we have written down our inventory of these motorcycles to its estimated net realizable
value and recorded an expense of $2.7 million. In December 2023 we notified Torrot that we want to terminate this agreement and we will
liquidate any remaining Volcon Youth motorcycle inventory. We have agreed to give Torrot a total of 1,000 Volcon branded Torrot motorcycles
originally purchased for $1.8 million, an up front payment of $370,000 and an additional $1.7 million to be paid out at $100,000 over
17 months beginning in April 2024 in exchange for unfulfilled 2023 and 2024 unit purchases.

 In 2022 we entered into a manufacturing agreements
with GLV Ventures ("GLV") to produce the Grunt and Grunt EVO, as well as the Stag and the Runt and we have transitioned from
a manufacturing model in which we manufactured and assembled the Grunt at our manufacturing facility located in Round Rock, Texas, to
one where we rely on this third party manufacturer to build the Grunt EVO, Stag and, if we decide to build the Run, in Mexico.

 As a result of moving to an outsourced design,
development and manufacturing model, we have reduced headcount in all departments to reduce costs. We continue to evaluate further cost
reductions while developing our sales and marketing team to sell and promote our products to customers in the U.S and to our international
distributors.

 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 business success will depend in large part
on our third party vendors' ability to economically produce our vehicles at sufficient capacity to meet the demands of our customers.

 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:

 delays due to design and development of our products to meet our product specifications

 delays due to defective parts or components

 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;

 shipping delays due to availability of ships, trains, trucks or containers to ship products or delays at ports to ship products to us or to our customers; and

 inability to control the quality of finished products.

 Our reliance on third parties reduces our control
over the manufacturing, design and development processes, including reduced control over timing to release products, quality, product
costs and product supply. We have experienced delays in the design and development of the Stag due to mechanical and electrical components
that failed or did not operate as expected. Significant time and development effort was required to address these issues which resulted
in significant delays in releasing the Stag. The first Stag unit was shipped to a customer in February 2024. We can provide no assurance
that we will not realize future delays in production, and until we have multiple manufacturers or manufacture our products internally,
our ability to release products on the timeline we expect will be dependent on our current outside manufacturers.

 If any of our third party vendors suffer interruptions,
experience delays in shipments or issues concerning product quality, supply chain or disruptions, including by reason of natural disasters,
work stoppages or capacity constraints, our ability to ship products to dealers and our international distributors would be delayed. Additionally,
if any of our third party vendors experience quality control problems in their operations, we could be required to cover the repair or
replacement of any defective products. These delays or product quality issues could have an immediate and material adverse effect on our
ability to fulfill orders and could have a negative impact on our operating results. In addition, such delays or issues with product quality
could harm our reputation and our relationship with our dealers, distributors and customers.

 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 contemplate
achieving and sustaining increases in vehicle deliveries. Our ability to achieve this plan depends upon several 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 will be successful in these efforts. In addition, as we do not have a long-term history
of sales, our forecasted demand may be materially incorrect, which could cause us to fail to meet unforeseen demand and incur higher costs
for excess inventory purchased to meet our forecast. 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 has in the past and could in the future 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.
We have in the past realized production delays due to delays in sourcing certain parts from single-source suppliers. We can provide no
assurance that we will not in the future realize additional such delays.

 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.

 Our third party manufacturers operate outside of the U.S., subjecting
us to risks of international operations.

 Our third party manufacturers operate outside of
the U.S. and as a result we are increasingly exposed to the challenges and risks of doing business outside the U.S., which could reduce
our revenues or profits, increase our costs, result in significant liabilities or sanctions, or otherwise disrupt our business. These
challenges include: (1) compliance with complex and changing laws, regulations and policies of governments that may impact our operations,
such as foreign ownership restrictions, import and export controls, tariffs, and trade restrictions; (2) compliance with U.S. and foreign
laws that affect the activities of companies abroad, such as anti-corruption laws, competition laws, currency regulations, and laws affecting
dealings with certain nations; (3) the difficulties involved in managing an organization doing business in many different countries; (4)
uncertainties as to the enforceability of contract and intellectual property rights under local laws; and (5) rapid changes in government
policy, political or civil unrest, acts of terrorism, or the threat of international boycotts or U.S. anti-boycott legislation.

 Products that we have manufactured for us in Mexico
and China may also be subject to any uncertainty of trade relations between such countries and the U. S., which could cause the cost of
our products manufactured there to rise, or result in our inability to continue to use third party manufacturers in such country, resulting
in a need to find alternative sources of manufacture, which could result in the delay of manufacture and supply of our products, increase
our cost of manufacture, and cause a delay in our shipments to customers and a delay or cancellation of orders. Our future operating results
and financial condition could be materially affected to the extent any of these actions occur.

 In addition, the prosecution of intellectual property
infringement and trade secret theft outside of the U.S. may be more difficult than in the U.S. Although we take precautions to protect
our intellectual property, using our third party manufacturers in Mexico and China could subject us to an increased risk that unauthorized
parties will be able to copy or otherwise obtain or use our intellectual property, and we may be unsuccessful in monitoring and enforcing
our intellectual property rights against them, which could harm our business. We may also have limited legal recourse in the event we
encounter patent or trademark infringers, which could adversely affect our business, results of operations, and financial condition. While
we take measures to protect our trade secrets, the use of third party manufacturers may also risk disclosure of our innovative and proprietary
manufacturing methodologies, which could adversely affect our business.

 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.

 We have entered into manufacturing, design and
development agreements with vendors with experience in the manufacturing, design and development of two-wheel and four-wheel off-road
vehicles to assist us with the development of certain aspects of and manufacturing of our vehicles. Although these vendors have successfully
assisted other companies with manufacture, design and development of vehicles, they may not be able to successfully design, develop and
manufacture our vehicles. These vendors may experience delays in fulfilling their obligations under these contracts due to the inability
to source parts from other vendors, lack of employees available to work on our projects due to labor shortages or other competing projects
from other customers or COVID-19-related issues impacting employees. Failure of these vendors to complete the contracted design, development
and manufacture projects for our vehicles will result in delays in obtaining regulatory approvals and delay production and release of
the vehicles for sale, which could have a material adverse effect on our business, reputation, results of operations or financial condition.

 Increases in costs, disruption of supply, or shortage of materials
could harm our business.

 Our third party manufacturers may experience increases
in the cost or a sustained interruption in the supply or shortage of materials. Any such increase, supply interruption or shortage could
materially and negatively impact our business, prospects, financial condition and operating results. The prices for these materials fluctuate,
and their available supply may be unstable, depending on market conditions and global demand for these materials, including as a result
of increased production of electric vehicle (EV) products by our competitors, and could adversely affect our business and operating results.
For instance, we are exposed to multiple risks relating to battery packs.

 These risks include:

 an increase in the cost, or decrease in the available supply, of materials used in the battery packs;

 disruption in the supply of battery packs due to quality issues or recalls by battery cell manufacturers;

 sanctions imposed by the U.S. on countries in which our products are manufactured or where parts are manufactured for our third party manufacturers; and

 tariffs on the products we source in China.

 Our business is dependent on the continued supply
of battery cells for the battery packs used in our vehicles. Any disruption in the supply of battery cells, including those caused by
the conflict between Russia and the Ukraine and sanctions imposed on Russia noted below, could disrupt production of our vehicles. Substantial
increases in the prices charged to us, such as those charged by battery cell suppliers, would increase our operating costs, and could
reduce our margins if we cannot recoup the increased costs through increased selling prices of our vehicles. Any attempts to increase
prices in response to increased material costs could result in the cancellation of vehicle orders and therefore materially and adversely
affect our brand, image, business, prospects and operating results.

 We have and could continue to experience 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 have encountered unanticipated challenges, such
as supply chain constraints, that led to initial delays in producing our vehicles. We have experienced longer lead times with certain
suppliers to obtain parts, especially those imported where shipping delays from outbound and inbound ports have caused delays or required
us to use air freight and incur higher shipping costs. We have outsourced the manufacturing of all of our vehicles and plan to outsource
all manufacturing of our vehicles for the foreseeable future. We also reduced headcount in all our departments, as we have outsourced
the design and development of our vehicles. Any significant delay or other complications in the production of our vehicles or the development,
manufacture, and production ramp of our future vehicles, including complications associated with our third party manufacturers'
supply chains or obtaining or maintaining regulatory approvals, and/or coronavirus impacts, could materially damage 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.

 We have delivered a limited number of vehicles
to customers and we have no meaningful historical financial data upon which we may base our projected revenue and operating expenses.
Our limited operating history makes it difficult for potential investors to evaluate our products or prospective operations and business
prospects. We are subject to all the risks inherent in business development, financing, unexpected expenditures, and complications and
delays that often occur in a new business. Investors should evaluate an investment in us in light of the uncertainties encountered by
developing companies in a competitive environment. There can be no assurance that our efforts will be successful or that we will ultimately
be able to attain profitability.

 The conflict with Russia and the Ukraine could have an impact
on the availability of components used in the manufacturing of lithium ion batteries that we use to power our vehicles.

 The recent conflict between Russia and the Ukraine
could impact the availability of nickel, an element used in the production of lithium ion cells used in batteries that power our vehicles.
According to the Wall Street Journal, Russia produces 5%-6% of the world's nickel supply and 17% of the high purity nickel production.
The shortage of these cells could have an impact on our ability to produce vehicles to meet our customers' demands. In addition,
sanctions against Russia could impact the price of elements, including nickel, that are used in the production of batteries which would
result in higher costs to produce our vehicles. These sanctions have also impacted the U.S. and global economy and could result in an
economic recession which could cause a broader disruption to the Company's supply chain and distribution network and customer demand
for our products. These factors would have a negative impact on our results of operations and cash flows.

 We are currently taking orders for the Brat Ebike, Grunt EVO
and Volcon Youth motorcycles and the Stag UTV, and if these vehicles fail to perform as expected, our reputation could be harmed and our
ability to develop, market and sell our vehicles could be harmed.

 If our vehicles were to contain defects in design
and manufacture that cause them not to perform as expected or that require repair or take longer than expected to deliver, our ability
to develop, market and sell our vehicles could be harmed. While we intend to perform internal testing on the vehicles, as a start-up company
our frame of reference by which to evaluate detailed long-term quality, reliability, durability and performance characteristics of our
vehicles is based on industry metrics rather than historical data. Although we have procedures to test all of our vehicles for defects,
there can be no assurance that we will be able to detect and fix all defects in our products prior to their sale to consumers. Any product
defects, delays, or other failure of our products to perform as expected could harm our reputation and result in delivery delays, product
recalls, product liability claims, significant warranty and other expenses, and could have a material adverse impact on our business,
financial condition, operating results and prospects.

 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.

 Our business and prospects heavily depend on our
ability to develop, maintain and strengthen the Volcon brand. If we are unable to establish, maintain and strengthen our brand, we may
lose the opportunity to build and maintain a critical mass of customers. Our ability to develop, maintain and strengthen our brand will
depend heavily on the success of our marketing efforts. Failure to develop and maintain a strong brand would materially and adversely
affect customer acceptance of our vehicles, could result in suppliers and other third parties being less likely to invest time and resources
in developing business relationships with us, and could materially adversely 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 development, production, marketing, sale and
usage of our vehicles will expose us to significant risks associated with product liability claims. The powersports vehicles industry
in particular is vulnerable to significant product liability claims, and we may face inherent risk of exposure to claims in the event
our vehicles do not perform or are claimed to not have performed as expected. If our products are defective, malfunction or are used incorrectly
by our customers, it may result in bodily injury, property damage or other injury, including death, which could give rise to product liability
claims against us. Any losses that we may suffer from any liability claims and the effect that any product liability litigation may have
upon the brand image, reputation and marketability of our products could have a material adverse impact on our business, results of operations
or financial condition. No assurance can be given that material product liability claims will not be made in the future against us, or
that claims will not arise in the future in excess or outside of our insurance coverage and contractual indemnities with suppliers and
manufacturers. We believe we have adequate product liability insurance; however, as we release new products and expand our sales channels,
we may not be able to obtain adequate product liability insurance or the cost of doing so may be prohibitive. Adverse determinations of
material product liability claims made against us could also harm our reputation and cause us to lose customers and could have a material
adverse effect on 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.

 The EV market is in its infancy, and we expect
it will become more competitive in the future. There is no assurance that our vehicles will be successful in the respective markets in
which they compete. A significant and growing number of established and new companies have entered or are reported to have plans to enter
the EV market, including the off-road market that we intend to pursue. Most of our current and potential competitors have significantly
greater financial, technical, manufacturing, marketing, sales networks, and other resources than we do and may be able to devote greater
resources to the design, development, manufacturing, distribution, promotion, sale and support of their products. Increased competition
could result in lower vehicle sales, price reductions, revenue shortfalls, loss of customers and loss of market share, which could harm
our business, prospects, financial condition, and operating results.

 We may need to defend ourselves against intellectual property
infringement claims, which may be time-consuming and could cause us to incur substantial costs.

 Others, including our competitors, may hold or
obtain patents, copyrights, trademarks or other proprietary rights that could prevent, limit or interfere with our ability to make, use,
develop, sell or market our products and services, which could make it more difficult for us to operate our business. From time to time,
the holders of such intellectual property rights may assert their rights and may bring suits alleging infringement or misappropriation
of such rights. In addition, if we are determined to have infringed upon a third party's intellectual property rights, we may be
required to cease making, selling or incorporating certain components or intellectual property into the products we offer, to pay substantial
damages and/or license royalties, to redesign our products, and/or to establish and maintain alternative branding for our products.

 We have registrations for the trademarks VOLCON
and GRUNT in the U.S. We have also applied to register additional trademarks – including VOLCON, VOLCON BRAT, VOLCON STAG, GRUNT
EVO, EMPOWERING ADVENTURE, RUNT, VOLCON RUNT, STAG, and VOLCON STAG - in the U.S., Canada, New Zealand, Australia and certain additional
countries in Latin America, and many of these trademarks are now allowed or registered in these countries. We have resolved some
conflicts and potential conflicts that have arisen with regard to the use and registration of our trademarks through coexistence agreements
and the submission of arguments. We have received notice from an entity in Brazil who has opposed our applications for trademarks
including the word VOLCON, but we believe the trademarks and the goods being sold under them are not similar and there is no potential
for confusion.

 We have also identified that in Australia, VOLCON
is similar to another trademark that does not appear to be in use. We have filed a removal application to remove the use of the other
trademark so that we can use VOLCON. However, there is no guarantee that our application to remove will be accepted. Our efforts to secure
trademark registrations for VOLCON and other trademarks referenced above are ongoing and we may encounter resistance from other companies,
particularly as we expand into additional territories. If we receive objections from other entities and are unsuccessful in obtaining
agreements or otherwise resolving the matters with these entities, we will need to consider the use of different trademarks for our Company
and our products.

 In the event that we were required to take one
or more such actions, our business, prospects, operating results and financial condition could be materially adversely affected. In addition,
any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management
attention.

 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.

 The Grunt EVO, Runt LT (if we decide to begin production)
Brat depend on materials from China, namely batteries, which are among the main components of our vehicles. In addition, components for
the Stag, mainly wiring harnesses, are also sourced from China. We cannot predict what actions may be taken with respect to tariffs or
trade relations between the U.S. and China, what products may be subject to such actions, or what actions may be taken by China in retaliation.
The adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs, trade
agreements or related policies have the potential to adversely impact our supply chain and access to equipment, our costs and our product
margins. Any such cost increases or decreases in availability could slow our growth and cause our financial results and operational metrics
to suffer.

 We primarily 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.

 As of March 15, 2024, we have 103 active dealers
to sell our vehicles and accessories. In 2022 we hired our first regional sales manager in Canada to begin developing our dealer network
for Canadian powersports vehicle dealers but in 2023 we determined we would defer selling our products in Canada and as of December 31,
2023 and we no longer have any Canadian employees.

 We are required to comply with manufacture/dealer
laws in each state in which we sell our vehicles through dealers. Dealer laws vary by state and although our dealer agreements are intended
to comply with these laws, we may be required to amend our agreements if these laws are changed or are challenged by dealers or other
OEMs. Our dealer and distribution agreements are generally short-term in nature and the dealer, distributor or we may cancel these agreements
under certain circumstances and we may not be able to retain or expand the scope of our dealer and/or distribution network in the future.

 We have entered into an accounts receivable factoring
arrangement to allow the Company the ability to generate cash for working capital. We will incur financing costs under this arrangement.
On a longer term basis we intend to obtain a "flooring" financing arrangement to allow financing sources for our dealers to
purchase vehicle inventory. We may incur costs to incentivize dealers to buy our vehicles including free dealer financing for certain
periods or based on purchase volumes, interest rate buydowns on the dealers' customer financing to incentivize their customers'
purchase of our vehicles. Because we are a young company with limited sales history and recurring losses, we may not be able to obtain
these inventory financing sources which may result in dealers not wanting to sell our vehicles.

 In the U.S., we began to sell the Brat and Volcon
youth motorcycles on our website in 2023, in addition to our dealer network and bicycle retailers. Customers can request that these vehicles
be delivered to a local Volcon dealer or directly to a location they can designate. We do not intend to compete with dealers who sell
these products and we provide for price protection to them in the event we are selling these products below the retail price they are
selling them for in order for them to maintain their margin.

 We also sell our vehicles and accessories internationally
through international distributors. As of December 31, 2023, we have signed distribution agreements with six distributors in Latin America,
one distributor in New Zealand and one distributor in the Caribbean region and in January 2024 we signed an agreement with a distributor
in Australia. We are relying on these distributors to market, promote, sell and service our vehicles and sell accessories in their designated
countries/territories.

 We believe our success will be highly dependent
on our ability to build out this network in the major markets in which we intend to compete for customers, and to maintain this network
in the future. Our business model is dependent not only on our ability to create the foregoing network, but also on the commitment and
motivation of these third parties to promote our brand and products.

 Orders for vehicles are cancelable and there can be no assurance
that all orders will result in revenue being recognized.

 Orders from U.S. dealers do not require an upfront
payment and are cancelable prior to shipment with no penalty. Orders from U.S. consumers for the Stag required a minimal reservation fee
and all orders are cancelable prior to shipment, although the reservation fee is forfeited unless it must be refunded in accordance with
state laws. Most importers must pay for orders in advance of shipment but can cancel an order prior to shipment and receive a refund without
penalty.

 The estimated fulfillment of all orders we have
received assumes our third party manufacturers can successfully increase their production capacity in the future, of which there is no
assurance. If we are unable to satisfy pending orders on a timely basis, customers may cancel their orders.

 In some cases, there will be significant time between
a customer ordering a vehicle and the eventual delivery of the vehicle, which creates a heightened risk that a customer that ordered a
vehicle may change his or her mind and not ultimately take delivery of the vehicle, and accessories, if purchased, in their order. Any
cancellations could harm our financial condition, business, prospects and operating results.

 We 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 may not be able to compete as effectively with
our competitors, and ultimately satisfy the needs and preferences of our customers, unless we can successfully enhance current products,
develop new innovative products, maintain or lower product costs and distinguish our products from our competitors' products through
innovation and design. Product development requires significant financial, technological, and other resources. There can be no assurance
that we will be able to incur a level of investment in research and development that will be sufficient to successfully make us competitive
in product innovation and design. In addition, even if we are able to successfully enhance existing products and develop new products,
there is no guarantee that the markets for our existing products and new products will progress as anticipated. If any of the markets
in which our existing products compete do not develop as expected, our business, results of operations or financial condition could be
materially adversely affected.

 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.

 We have limited experience servicing or repairing
our vehicles and we are developing our service manuals and service procedures to repair our vehicles. We are in the process of developing
a network of service providers who will also be our dealers as many states require that only dealers can provide warranty service on vehicles.
For our international distributors, they will be service providers or will identify third parties who will be service providers to service
our vehicles.

 Servicing electric vehicles is different from servicing
vehicles with internal combustion engines and requires specialized skills, including high voltage training and servicing techniques. If
we are unable to successfully address the service requirements of our customers, our business and prospects will be materially and adversely
affected. If we are unable to successfully address the servicing requirements of our customers or establish a market perception that we
maintain high-quality support, our reputation could be harmed, we may be subject to claims from our customers, and our business, results
of operations or financial condition may 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.

 We provide a one-year warranty against defects
for the Grunt EVO, Brat and Volcon youth motorcycles and a two-year warranty on the battery. The manufacturers of the Brat and Volcon
youth motorcycles provide the warranty for these products and we are reimbursed for warranty claims provided we obtain approval of the
claim from the manufacturer.

 We currently expect to provide a similar warranty
the Runt LT when it is released for sale. Our warranty for the Stag is also one-year against defects and two years for the batteries.
Our warranty will generally require us to repair or replace defective products during such warranty periods at no cost to the consumer.
Some of the parts are warrantied by the part manufacturer where others are no. We record provisions based on an estimate of product warranty
claims, but there is the possibility that actual claims may exceed these provisions and therefore negatively impact our results of operations
of financial condition.

 In addition, we may in the future be required to
make product recalls or could be held liable in the event that some of our products do not meet safety standards or statutory requirements
on product safety, even if the defects related to any such recall or liability are not covered by our limited warranty. The repair and
replacement costs that we could incur in connection with a recall could have a material adverse effect on our business, results of operations
or financial condition. Product recalls could also harm our reputation and cause us to lose customers, particularly if recalls cause consumers
to question the safety or reliability of our products, which could have a material adverse effect 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.

 Our success is dependent upon the success of the
off-road vehicle industry as a whole, and in particular upon consumers' willingness to adopt electric vehicles as an alternative
to combustion vehicles. If the market for electric off-road vehicles does not develop at the rate or in the manner or to the extent that
we expect, our business, results of operations or financial condition may be adversely materially affected. The market for electric vehicles
is relatively new, rapidly evolving, characterized by rapidly changing technologies, price competition, additional competitors, evolving
government regulation and industry standard, frequent new vehicle announcements and changing consumer demands and behaviors. Factors that
may influence the adoption of electric vehicles include:

 perceptions about electric vehicle quality, safety, design, performance and costs;

 the limited range over which electric vehicles may be driven on a single battery charge, and the decline of an electric vehicle's range resulting from deterioration over time in the battery's ability to hold a charge;

 the ability to easily charge electric vehicles

 volatility in the cost of oil and gasoline, and improvements in the fuel economy of combustion engines; and

 the environmental consciousness of off-road vehicles customers.

 The influence of any of the factors described above
may cause our customers not to purchase our vehicles and may otherwise materially adversely affect our business, results of operations
or financial condition.

 Higher inflation and interest rates, volatile financial markets,
unemployment and consumer confidence may cause consumers to defer or not purchase our products.

 Globally inflation and interest rates rose in 2023
compared to 2022 and could continue to rise or remain at current levels in the future. Our vehicles represent a discretionary purchase.
Many consumers finance the purchase of an off-road vehicle and higher interest rates will result in higher monthly payments which some
consumers may not qualify for or consumers may elect to defer their purchase until interest rates decline.

 In addition, global financial markets overall have
seen significant volatility in 2023 and could continue to experience volatility in the future and could decline. A number of large companies
have announced layoffs. Public companies in the EV sector have seen significant declines and volatility in 2023. Consumer confidence in
the U.S. has declined.

 The influence of any of the factors described above
may cause our customers not to purchase our vehicles and may otherwise materially adversely affect our business, results of operations
or financial condition.

 We currently operate in an area of the vehicle sector that is
not heavily regulated, and future changes in government oversight may subject us to increased regulations, which may increase our expenses.

 The off-road vehicle market is not heavily regulated,
as compared to on-road vehicles, and, as such, we are not currently subject to significant government regulations. As this market develops
and grows, it may come under increased regulatory scrutiny, which may result in increased regulations. This increase in regulations may
result in increased costs and expenses, which may materially and adversely affect our business, results of operations or financial condition.

 We could be negatively impacted by cybersecurity
attacks and are subject to evolving privacy laws in the U.S. and other jurisdictions that could adversely impact our business and require
that we incur substantial costs.

 We use a variety of information technology systems
in the ordinary course of business, which are potentially vulnerable to unauthorized access, computer viruses, ransomware software viruses
and other similar types of malicious activities and cyber-attacks, including cyber-attacks to our information technology infrastructure
and attempts by others to gain access to our proprietary or sensitive information, and ranging from individual attempts to advanced persistent
threats. Additionally, our vendors and potentially our customers, such as federal, state and local governments, require us to maintain
and protect our information technology infrastructure to specified standards in order to protect not only our sensitive information, but
also their sensitive information. Further, ransomware attacks are becoming increasingly prevalent and severe. To alleviate the financial,
operational, and reputational impact of a ransomware attack, it may be preferable to make extortion payments, but we may be unwilling
or unable to do so, including, for example, if applicable laws or regulations prohibit such payments. The procedures and controls we use
to monitor these threats and mitigate our exposure may not be sufficient to prevent cybersecurity incidents. The results of these incidents
could include misstated financial data, theft of trade secrets or other intellectual property, liability for disclosure of confidential
customer, supplier or employee information, increased costs arising from the implementation of additional security protective measures,
litigation and reputational damage, which could materially adversely affect our financial condition, business or results of operations.
Any remedial costs or other liabilities related to cybersecurity incidents may not be fully insured or indemnified by other means. Moreover,
we or our third party vendors or business partners may be more vulnerable to such attacks in remote work environments, which have increased
in response to the COVID-19 pandemic. Additionally, security breaches could result in a violation of applicable U.S. and international
privacy and other laws and subject us to governmental investigations and proceedings, which could result in our exposure to material civil
or criminal liability.

 Risks Related to our Common Stock

 In March 2024, we exchanged our outstanding convertible notes
for Preferred Stock and a significant number of shares of common stock could be issued upon conversion.

 In March 2024, we issued Series A Preferred Stock
(the "Preferred Stock") at $1,000 per share in exchange for $24.7 million principal of convertible notes. The initial conversion
price for the Preferred Stock is $1.33 and is convertible at any time. On March 5, 2024, certain holders of the Preferred Stock converted
approximately $2.3 million for approximately 1.7 million shares of common stock. The total number of shares of common stock that could
be issued as of March 27, 2024 for the outstanding Preferred Stock on this date is approximately
16.8 million shares. The conversion price of the Preferred Stock is subject to adjustment if certain events such as a stock split, reverse
stock split, or stock dividend occurs, or if we issue equity or convertible instruments at offering prices below the conversion price.
In addition, in the event of a change of control or sale of substantially all of the Company's assets, the Preferred Stock agreement
provides for distributions that are either based on the number of common stock shares issuable under these agreements or based on other
valuations as defined in the agreement.

 The Preferred Stock holders may resell all, or
some of the shares of common stock underlying the Preferred Stock after conversion, at any time or from time to time at their discretion.
Resales of our common stock may cause the market price of our securities to drop significantly, regardless of the performance of our business.
The adjustment of the conversion price for the Preferred Stock held by these investors based on the price of future issuances of securities
could also limit our ability to raise capital as potential investors may not make an investment in a new issuance of securities if their
investment could be immediately diluted due to adjustments in the conversion price or warrant exercise prices.

 We have issued Series B warrants in connection with the public
offering completed in November 2023 that have provisions that can increase the number of warrants and reduce the exercise price if we
complete certain transactions.

 Our public offering completed in November 2023
included Series A and Series B warrants ("Series A Warrants" and "Series B Warrants") to purchase our common stock
with initial exercise prices of $24.75 and $37.80, respectively. As of March 27, 2023,
approximately 42,000 and 14.5 million Series A Warrants and Series B Warrants, respectively, remain outstanding and the Series A Warrants
have an exercise price of $1.8636 and the Series B Warrants have an exercise price of $0.9059. Series A Warrants may be exercised on an
alternative cash basis where each warrant exercised will result in the Company issuing three shares of common stock.

 The Series B Warrants provide, subject to certain
exemptions, that if we sell or issue, any common stock or convertible securities, at an effective price per share less than the exercise
price of the Series B Warrant then in effect, or a Dilutive Issuance, the exercise price of the Series B Warrant will be reduced to an
amount equal to the lowest daily volume weighted average price ("VWAP") during the period commencing five consecutive trading
days following the Dilutive Issuance and the number of shares issuable upon exercise of the Series B Warrant shall be proportionally adjusted
so that the aggregate exercise price of the Series B Warrant shall remain unchanged.

 Further, if at any time on or after the date of
issuance there occurs any share split, share dividend, share combination, recapitalization or other similar transaction involving our
common stock and the lowest daily VWAP during the five consecutive trading days prior to the date of such event and the five consecutive
trading days after the date of such event is less than the exercise price then in effect, then the exercise price shall be reduced to
the lowest daily VWAP during such period and the number of warrant shares issuable shall be increased such that the aggregate exercise
price payable thereunder, after taking into account the decrease in the exercise price, shall be equal to the aggregate exercise price
on the date of issuance.

 As a result of the 1 for 45 reverse stock split
we completed on February 5, 2024, the exercise price of approximately 15.8 million Series B Warrants were reset to $1.8646 based on the
lowest VWAP over the course of the five day trading period through February 12, 2024 and the new amount of Series B Warrants as of this
date became approximately 7.1 million.

 As a result of the exchange of the Convertible
Notes for Preferred Stock (convertible at $1.33 per share of common stock) in March 2024 noted above, the exercise price of the Series
B warrants adjusted to $0.91 per share based on the lowest VWAP in the five day trading period through March 12, 2024 and the total number
of Series B Warrants adjusted to approximately 14.5 million.

 Further adjustments to the Series B Warrant exercise
price and number of warrants may occur if we complete any additional transactions or complete another reverse stock split per the terms
of the Series B Warrants.

 Although some of the holders of Series A and Series
B Warrants have ownership limitations, if and when we do issue shares of common stock to holders of the Series A Warrants and Series B
Warrants upon the exercise by the holder, such stockholders may resell all, some or none of those shares of common stock at any time or
from time to time at their discretion. Resales of our common stock may cause the market price of our securities to drop significantly,
regardless of the performance of our business.

 Your ownership may be diluted if additional capital stock is issued to raise capital, to finance our operations, to complete acquisitions
or in connection with strategic transactions.

 We will need to raise additional funds to finance
our operations, to complete acquisitions or to develop strategic relationships by issuing equity or convertible debt securities, which
would reduce the percentage ownership of our existing stockholders. Our board of directors has the authority, without action or vote of
the stockholders, to issue all or any part of our authorized but unissued shares of common or preferred stock. Our certificate of incorporation
authorizes us to issue up to 250,000,000 shares of common stock and 5,000,000 shares of preferred stock. Future issuances of common or
preferred stock would reduce your influence over matters on which stockholders vote and would be dilutive to earnings per share. In addition,
any newly issued preferred stock could have rights, preferences and privileges senior to those of the common stock. Those rights, preferences
and privileges could include, among other things, the establishment of dividends that must be paid prior to declaring or paying dividends
or other distributions to holders of our common stock or providing for preferential liquidation rights. These rights, preferences and
privileges could negatively affect the rights of holders of our common stock, and the right to convert such preferred stock into shares
of our common stock at a rate or price that would have a dilutive effect on the outstanding shares of our common stock.

 If our stock price fluctuates, you could lose a significant part
of your investment.

 Since our initial public offering through March
27, 2024 our share price has fluctuated from a high of $3,933.00 to a low of $0.565, (as adjusted for the 1 for 5 and 1 for 45 reverse
stock splits completed in October 2023 and February 2024, respectively) and closed at $0.68 on March 27, 2024. The market price
of our common stock is subject to wide fluctuations in response to, among other things, the risk factors described in this filing and
other factors beyond our control, such as fluctuations in the valuation of companies perceived by investors to be comparable to us. Furthermore,
the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity
securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies.
These broad market and industry fluctuations, as well as general economic, political, and market conditions, such as recessions, interest
rate changes or international currency fluctuations, may negatively affect the market price of our common stock. In the past, many companies
that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be
the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our
management's attention from other business concerns, which could seriously harm our business.

 We are party to certain agreements with a founder of the Company
and certain executive officers that may create a conflict of interest for our board of directors in evaluating a potential change of control
transaction.

 We had previously entered into a consulting agreement
Highbridge Consultants, LLC ("Highbridge"), an entity controlled by Mr. Adrian James, who is a former member of our board
of directors and current stockholder, pursuant to which Mr. James would provide us with services. Pursuant to the consulting agreements,
upon the occurrence of a Fundamental Transaction (as contemplated by such agreement), which generally includes a business combination,
merger, or sale of all or substantially all of our assets (or similar events), for an aggregate gross sales price of $100.0 million or
more, Highbridge will receive a cash payment equal to 1% of such gross sales price. This payment upon the consummation of a Fundamental
Transaction may make our company less attractive to a potential acquirer or may reduce the valuation we receive in connection with a Fundamental
Transaction.

 Furthermore, if our market capitalization exceeds
$300.0 million for a period of 21 consecutive trading days, Highbridge will receive an additional cash payment equal to $15.0 million;
provided that we will have the right, in our sole discretion, to make the foregoing $15.0 million payment by the issuance of shares of
our common stock. If we elect to make any payments to the entities in the form of stock, it would reduce the ownership percentage of our
other stockholders.

 In January 2024, the Company entered into an employment
agreement with John Kim, a member of the board of directors of the Company, to become the Company's CEO and President. Also in January
2024, the Company entered into an employment agreement with Greg Endo, the Company's CFO and Executive Vice President. As part of
the employment agreements with Mr. Kim and Mr. Endo, they are each entitled to a payment of 5% of the gross proceeds from any merger,
sale or change of control transaction (as determined by the board of directors) entered by the Company for a period of up to 6 months
after termination of employment; provided that they are not terminated for Cause (as defined in the employment agreement).

 In March 2024, the Company entered into a consulting
agreement with Christian Okonsky, a founder of the Company, chairman of the board of directors and former Chief Technology Officer. As
part of the consulting agreement Mr. Okonsky is entitled to a payment of 1% of the gross proceeds from any merger, sale or change of control
transaction (as determined by the board of directors) entered by the Company for a period of up to 6 months following the termination
of the consulting agreement.

 These change of control payments may create a conflict
of interest for these directors and officers in evaluating any future change of control transactions.

 If we agree to complete additional
warrant inducements to the holders of warrants issued in in our August 2022 and May 2023 convertible note offerings (the "Investors"),
we may reduce the exercise price of warrants held by Investors and we may issue additional warrants to the Investors to replace some or
all of the warrants that were exercised.

 In September and October 2023,
in an effort to raise cash, we entered into warrant inducement agreements with certain investors where we reduced the exercise price of
certain warrants to induce them to these exercise warrants.

 To the extent we complete
similar warrant inducements in the future, our stockholders may experience substantial dilution.

 We do not intend to pay dividends in the
foreseeable future.

 We have never declared or paid any cash dividends
on our capital stock. We do not expect to pay any cash dividends on our common stock in the foreseeable future. Payment of future dividends,
if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital
requirements, restrictions contained in any financing instruments, provisions of applicable law and other factors the board deems relevant.

 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.

 The trading market for our common stock is influenced
by the research and reports that industry or securities analysts publish about us, our industry and our market. If no analyst elects to
cover us and publish research or reports about us, the market for our common stock could be severely limited and our stock price could
be adversely affected. As a small-cap company, we are more likely than our larger competitors to lack coverage from securities analysts.
In addition, even if we receive analyst coverage, if one or more analysts ceases coverage of us or fails to regularly publish reports
on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. If one
or more analysts who elect to cover us issue negative reports or adversely change their recommendations regarding our common stock, our
stock price could decline.

 If we fail to satisfy all applicable continued
listing requirements of the Nasdaq Capital Market our common stock may be delisted from Nasdaq, which could have an adverse impact on
the liquidity and market price of our common stock.

 Our
common stock is currently listed on the Nasdaq Capital Market. In order to maintain that listing, we must satisfy minimum financial and
other continued listing requirements and standards, including those regarding director independence and independent committee requirements,
minimum stockholders' equity, minimum bid price, and certain corporate governance requirements. There can be no assurances that
we will be able to comply with the applicable listing standards.

 On July 5, 2023, we received
a notice from Nasdaq that we were not in compliance with Nasdaq's Listing Rule 5550(b)(2), which requires that we maintain a market
value of listed securities ("MVLS") of $35 million. MVLS is calculated by multiplying our shares outstanding by the closing
price of our common stock. On July 6, 2023, we received a notice from Nasdaq that we were not in compliance with Nasdaq's Listing
Rule 5550(a)(2), (the "Bid Price Rule") as the minimum bid price of our common stock had been below $1.00 per share for 30
consecutive business days. On October 30, 2023, the Company received a notice from Nasdaq that it has now regained compliance with Rule
5550(a)(2), as the minimum bid price of its common stock was above $1.00 for 10 consecutive business days.

 On December 19, 2023, the Company
received a notice from the Nasdaq that we were not in compliance with Nasdaq's Listing Rule 5550(a)(2), (the "Bid Price Rule")
as the minimum bid price of our common stock had been below $1.00 per share for 30 consecutive business days.

 On December 26, 2023, the Company was notified
by Nasdaq that we that we were not in compliance with Nasdaq's Listing Rule 5810(c)(3)(A)(iii) as the closing bid price of our common
stock had been below $0.10 for ten consecutive trading days from December 11, 2023 through December 22, 2023 (the "Low Priced Stocks
Rule") and was subject to delisting on January 2, 2024. On January 4, 2024 we received notice from Nasdaq that we did not meet the
MVLS requirement and we were subject to delisting. The Company submitted a hearing request to Nasdaq's Hearings Department for both
of these matters, which stayed the suspension of the Company's common stock. We participated in the hearing on March 26, 2024 and
we were informed that we may be provided with a decision two weeks from this date, although the timing of the decision is at the discretion
of Nasdaq.

 In
the event that our common stock is delisted from Nasdaq and is not eligible for quotation or listing on another market or exchange, trading
of our common stock could be conducted only in the over-the-counter market or on an electronic bulletin board established for unlisted
securities such as the Pink Sheets or the OTC Bulletin Board. In such an event, it could become more difficult to dispose of, or obtain
accurate price quotations for, our common stock, and there would likely also be a reduction in our coverage by securities analysts and
the news media, which could cause the price of our common stock to decline further. Also, it may be difficult for us to raise additional
capital if we are not listed on a major exchange.

 In an effort to regain compliance with Nasdaq
listing rules, we completed a reverse stock split on October 13, 2023 and a reverse stock split on February 5, 2024. We cannot predict
whether we will need to complete an additional reverse stock split and the effect that such reverse stock split will have on the market
price for shares of our common stock.

 As noted in the risk factor above, we were out
of compliance with the Bid Price Rule and the Low Priced Stocks Rule in December 2023. In an effort to regain compliance with these rules
our board of directors authorized a reverse stock split of one for forty-five (1 for 45) on January 27, 2024 and we completed the reverse
stock split on February 5, 2024. The Company's stock price as of March 27, 2024 is below $1.00 and we may complete another reverse
stock split before June 17, 2024 in order to regain compliance with the Bid Price Rule.

 We cannot predict the effect
that the reverse stock split will have on the market price for shares of our common stock, and the history of previous reverse stock splits
has not resulted in our share price remaining above $1.00. Some investors may have a negative view of a reverse stock split. Even if the
reverse stock split has a positive effect on the market price for shares of our common stock, performance of our business and financial
results, general economic conditions and the market perception of our business, and other adverse factors which may not be in our control
could lead to a decrease in the price of our common stock following the reverse stock split.

 Furthermore, even if the reverse
stock split does result in an increased market price per share of our common stock, the market price per share following the reverse stock
split may not increase in proportion to the reduction of the number of shares of our common stock outstanding before the implementation
of the reverse stock split. Accordingly, even with an increased market price per share, the total market capitalization of shares of our
common stock after a reverse stock split could be lower than the total market capitalization before the reverse stock split. Also, even
if there is an initial increase in the market price per share of our common stock after a reverse stock split, the market price may not
remain at that level.

 If the market price of shares
of our common stock declines following the reverse stock split, the percentage decline as an absolute number and as a percentage of our
overall market capitalization may be greater than would occur in the absence of the reverse stock split due to decreased liquidity in
the market for our common stock. Accordingly, the total market capitalization of our common stock following the reverse stock split could
be lower than the total market capitalization before the reverse stock split.

 If we complete a reverse stock
split, the conversion price of our Preferred Stock and some of our outstanding warrants will adjust and some of the warrants will be adjusted
to increase the number of warrants outstanding which will result in additional dilution to shareholders.

 As an "emerging growth company" under the Jumpstart
Our Business Startups Act, or JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.

 As an "emerging growth company" under
the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. We are an emerging growth company
until the earliest of:

 the last day of the fiscal year during which we have total annual gross revenues of $1.235 billion or more;

 the last day of the fiscal year following the fifth anniversary of our initial public offering;

 the date on which we have, during the previous 3-year period, issued more than $1 billion in non-convertible debt; or

 the date on which we are deemed a "large accelerated issuer" as defined under the federal securities laws.

 For so long as we remain an emerging growth company,
we will not be required to:

 have an auditor report on our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

 comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about the audit and the financial statements (auditor discussion and analysis);

 submit certain executive compensation matters to stockholders advisory votes pursuant to the "say on frequency" and "say on pay" provisions (requiring a non-binding stockholder vote to approve compensation of certain executive officers) and the "say on golden parachute" provisions (requiring a non-binding stockholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and

 include detailed compensation discussion and analysis in our filings under the Securities Exchange Act of 1934, as amended, and instead may provide a reduced level of disclosure concerning executive compensation.

 Additionally, for so long as we remain an emerging
growth company, we:

 may present only two years of audited financial statements and only two years of related Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD and

 are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act.

 We intend to take advantage of all of these reduced
reporting requirements and exemptions, other than the longer phase-in periods for the adoption of new or revised financial accounting
standards under §107 of the JOBS Act.

 Certain of these reduced reporting requirements
and exemptions were already available to us due to the fact that we also qualify as a "smaller reporting company" under SEC
rules. For instance, smaller reporting companies are not required to obtain an auditor attestation and report regarding management's
assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required
to provide a pay-for-performance graph or CEO pay ratio disclosure; and may present only two years of audited financial statements and
related MD&A disclosure.

 ITEM 1B. UNRESOLVED STAFF COMMENTS

 None.

 ITEM 1C. CYBERSECURITY

 Risk Management and Strategy

 We have established policies
and procedures for assessing, identifying, and managing material risk from cybersecurity threats. We monitor cybersecurity threats, including
any potential unauthorized occurrence on or conducted through our information systems that we use through third party providers that may
result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.

 We conducted a NIST risk assessment
and perform as needed updates to our risks to identify cybersecurity threats, as well as assessments in the event of a material change
in our business practices that may affect information systems that are vulnerable to such cybersecurity threats. We engage a managed service
provider ("MSP") and other third parties in connection with our cybersecurity and information technology risk assessment processes
and our MSP also assists us with managing and monitoring our network and local compute systems. These service providers assist us in designing
and implementing our cybersecurity policies and procedures, as well as monitoring and testing our safeguards. Personnel at all levels
and departments are made aware of our cybersecurity policies through communications.

 As of December 31, 2023, and
through the date of the filing of this report, we are not aware of any cybersecurity incidents that have materially affected or are reasonably
likely to materially affect us, including our business strategy, results of operations or financial condition. For additional information
regarding risks from cybersecurity threats, please refer to Item 1A, "Risk Factors," in this Annual report on Form 10-K.

 Governance

 One of the key responsibilities
of our board of directors is informed oversight of our risk management process, including risks from cybersecurity threats. Our board
of directors is responsible for monitoring and assessing strategic risk exposure, and our executive officers are responsible for the day-to-day
management of the material risks we face.

 Our Executive Vice-President
and Chief Financial Officer ("CFO") is primarily responsible for assessing and managing our material risks from cybersecurity
threats. In this regard, our CFO has assistance from service providers, other consultants and third parties. Our CFO has served as
an executive officer for three years and prior to this was an audit and advisory partner at a public accounting firm overseeing financial
statement audits of public and private companies. Audit procedures performed for his clients included evaluating internal controls and
risk assessment evaluations over information technology and cybersecurity policies.

 Our CFO oversees our cybersecurity
policies and procedures, including those described in "Risk Management and Strategy" above. Under such policies and procedures,
our CFO is responsible for reporting to our board of directors regarding any cybersecurity incident including the results of cybersecurity
risk assessments.

 ITEM 2. PROPERTIES

 Our corporate headquarters is located in Round
Rock, Texas, where we currently lease approximately 23,300 square feet of space across three facilities.

 We believe that
our existing space is adequate for our current operations. We believe that suitable replacement and additional space, if necessary, will
be available in the future on commercially reasonable terms.

 ITEM 3. LEGAL PROCEEDINGS

 From time to time in the ordinary course of our
business, we may be involved in legal proceedings, the outcomes of which may not be determinable. The results of litigation are inherently
unpredictable. Any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant
amounts of management time and result in diversion of significant resources. We are not able to estimate an aggregate amount or range
of reasonably possible losses for those legal matters for which losses are not probable and estimable. We have insurance policies covering
potential losses where such coverage is cost effective.

 ITEM 4. MINE SAFETY DISCLOSURES

 Not applicable.

 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

 Market Information

 Our common stock is listed on the NASDAQ Stock
Market LLC under the symbol "VLCN".

 Holders

 As of March 26, 2024, we had 1,159 stockholders
of record and 18,748,955 outstanding shares.

 Dividends

 We have never declared or paid any cash dividends
on our capital stock. The payment of dividends in the future will be contingent upon our revenues and earnings, if any, capital requirements
and general financial condition. We currently intend to retain earnings, if any, to finance the growth and development of our business.
We do not expect to pay any cash dividends on our common stock in the foreseeable future. Payment of future dividends, if any, will be
at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, restrictions
contained in any financing instruments, provisions of applicable law and other factors the board deems relevant.

 Issuer Purchases of Equity Securities

 None.

 Recent Sales of Unregistered
Securities

 All
information related to equity securities sold by us during the period covered by this report that were not registered under the Securities
Act have been included in our Form 10-Q filings or in a Form 8-K filing. We did not issue any equity securities during the fourth quarter
of 2023 that were not registered under the Securities Act.

 ITEM 6. [RESERVED]

 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

 You should read the following discussion and
analysis of our financial condition and results of operations in conjunction with the financial statements and the related notes appearing
elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements reflecting our current expectations
that involve risks and uncertainties. Actual results and the timing of events could differ materially from those discussed in our forward-looking
statements as a result of many factors, including those set forth under "Risk Factors" and elsewhere in this Annual Report
on Form 10-K.

 Overview

 We are an all-electric, off-road
powersports vehicle company developing electric two and four-wheel motorcycles and utility terrain vehicles, or UTVs, also known as side-by-sides,
along with a line of upgrades and accessories. In October 2020, we began building and testing prototypes for our future offerings with
two off-road motorcycles – the Grunt and the Runt. Our motorcycles feature unique frame designs protected by design patents. Additional
utility and design patents have been filed for other aspects of Volcon's vehicles.

 We initially began to sell
and distribute the Grunt and related accessories in the United States ('U.S.") on a direct-to-consumer sales platform. We
terminated our Grunt direct-to-consumer sales platform in November 2021. Prior to the termination of our direct-to-consumer sales platform,
U.S. consumers made deposits for 360 Grunts (net of cancellations) and five Runts, plus accessories and a delivery fee representing total
deposits of $2.2 million. These orders were cancelable by the consumer until the vehicle was delivered and after a 14-day acceptance period,
therefore the deposits were recorded as deferred revenue. As of June 30, 2022, we had completed shipping of all Grunts sold through our
direct-to-consumer sales platform. Due to delays in developing the Runt, we refunded the deposits made for all Runts.

 Beginning in November 2021,
we began negotiating dealership agreements with powersports dealers to display and sell our vehicles and accessories. Customers can now,
or will soon be able to, buy our vehicles and accessories directly from a local dealership. Some of these dealers will also provide warranty
and repair services to customers. As of March 15, 2024, we have 103 active dealers. Dealers can order any of our available products provided
they are current on their accounts receivable and are within their established credit limit. We are offering dealers payment terms 30
to 90 days to make larger purchases of our vehicles. We have entered into an accounts receivable factoring arrangement to allow the Company
the ability to generate cash for working capital. We have agreements with third party financing companies to provide financing to qualified
customers of each dealer. There is no recourse to the Company or the dealer if the dealer's customer defaults on the financing agreement
with the third party.

 We sell our vehicles internationally
through importers. Each importer buys vehicles by the container and sells vehicles and accessories to local dealers or directly to consumers.
Local dealers or the importer will provide warranty and repair services for vehicles purchased in their country. In October 2023, the
Company made a decision to postpone expanding our dealer network in Canada for the foreseeable future and we have terminated the employment
of our Canadian regional sales managers. As of March 15, 2024, we have signed agreements with six importers in Latin America, one importer
for the Caribbean Region, collectively referred to herein as the LATAM importers, one importer in New Zealand, and one importer in Australia
to sell our vehicles and accessories in their assigned countries/markets. In 2024, we expect to expand our global sales of our vehicles
and accessories beyond our current distributor base.

 In June 2022, we signed an
exclusive distribution agreement with Torrot Electric Europa S.A., referred to herein as Torrot, to distribute their electric motorcycles
for youth riders in Latin America. In October 2022, we signed an expanded agreement with Torrot, which superseded the June 2022 agreement,
to also be the exclusive distributor of Torrot and Volcon co-branded youth electric motorcycles in the U.S. as well as Latin America.
Finally, in December 2022, we signed an expanded agreement with Torrot to be the exclusive distributor of Volcon co-branded youth electric
motorcycles in Canada. In June 2023, we wrote down all remaining Torrot branded inventory in the amount of $84,000. In December 2023 we
notified Torrot that we were terminating our agreements due to continued lower than expected sales at significantly discounted pricing.
In 2023, we wrote down the Volcon co-branded Torrot youth motorcycles by $2,674,352 to reduce their cost to the estimated net realizable
value due to lower than expected sales. We have agreed to give Torrot a total of 1,000 Volcon branded Torrot motorcycles originally purchased
for $1.8 million, an upfront payment of $370,000 and an additional $1.7 million to be paid out at $100,000 over 17 months beginning in
April 2024 in exchange for unfulfilled 2023 and 2024 unit purchases. As of December 31, 2023, we have Volcon Youth inventory of approximately
$239,935, after reducing these to the estimated net realizable value, of Volcon branded Torrot motorcycles and accessories which we intend
to liquidate and we have agreed to give Torrot sales rights in the U.S., Canada and LATAM after June 30, 2024.

 In July 2022, we expanded
our offerings with the introduction of the first of our Volcon UTV models, the Stag, which we initially anticipated would be available
for delivery to customers in the fourth quarter of 2023, followed by additional models of the Stag expected in 2024 and 2025. Due to a
delay in certain parts from third party vendors, we expect delivery to customers to begin in the first quarter of 2024. The Stag is being
manufactured by a third party and incorporates electrification units, which include batteries, drive units and control modules provided
by General Motors. Beginning in June 2022, we took non-binding pre-production orders which are cancelable prior to delivery. In the third
quarter of 2023 we canceled all of the original pre-production orders due to the introduction of multiple models and new pricing. We began
taking new pre-production orders for the newly introduced models in the third quarter of 2023. We also expect to introduce a higher performance,
longer range UTV (to be named) but development of this vehicle has not yet begun and no timeline for its development and release has been
determined.

 In August 2022 we ceased manufacturing
of the Grunt and we outsourced the manufacturing of the remaining Grunts and the 2024 Grunt EVO to the same third party manufacturer as
the Stag. The 2024 Grunt EVO has replaced the Grunt and has a belt drive rather than a chain drive as well as an updated rear suspension.
We began selling the Grunt EVO in the third quarter of 2023.

 We began taking pre-orders
for an E-Bike, the Brat, in September 2022 and shipments to customers began in the fourth quarter of 2022. The Brat is being manufactured
by a third party. In January 2023, we began selling the Brat directly to consumers through our website. Consumers who order the Brat from
our website can have the Brat shipped to their specified destination.

 In November 2022, we finalized
an agreement with the same third party that manufactures the Stag and Grunt EVO to manufacture the Runt LT. We received prototypes of
the Runt LT in the first quarter of 2023. We are evaluating the market for the Runt LT and will determine whether to proceed with production
in the first half of 2024.

 The estimated fulfillment
of all orders we have received assumes that our third party manufacturers can successfully meet our order quantities and deadlines. If
they are unable to satisfy orders on a timely basis, our customers may cancel their orders.

 In September and October 2023,
we reduced our headcount in several departments to reduce costs and we continue to evaluate other cost reduction opportunities.

 Results of Operations

 The following
financial information is for the years ended December 31, 2023 and 2022.

 2023

 2022

 Revenue

 $
 3,260,988

 $
 4,546,686

 Cost of goods sold

 11,391,040

 13,412,820

 Gross margin

 (8,130,052
)

 (8,866,134
)

 Operating expenses:

 Sales and marketing

 7,405,705

 5,694,556

 Product development

 7,868,985

 8,456,157

 General and administrative

 6,388,007

 9,046,778

 Total operating expenses

 21,662,697

 23,197,491

 Loss from operations

 (29,792,749
)

 (32,063,625
)

 Interest and other expense

 (15,278,462
)

 (2,171,780
)

 $
 (45,071,211
)

 $
 (34,235,405
)

 Due to recurring losses, there is no provision for income taxes for
any period presented.

 Revenue

 Revenue for the year ended December 31, 2023,
was $3,260,988 which represents sales of Brats of $2,341,097, Grunt EVO motorcycles of $465,438, Grunt motorcycles of $129,117, Volcon
Youth and Torrot motorcycles of $498,160 and accessories and parts of $261,663 offset by $436,333 for rebates and dealer discounts.

 Revenue for the year ended December 31, 2022, was $4,546,686, which represents sales of Grunts
of $3,576,796 and accessories and parts of $250,780. The sales of Grunts are offset by promotional rebates and discounts provided to
dealers and distributors during 2022 resulting in $930,422 being recorded to reduce revenue. The rebate is provided as a year-end incentive
to dealers and distributors to sell their remaining 2022 Model Year Grunt inventory. Revenue of $489,769 and $129,383 represents the
sale of Brats and Torrot kids motorcycles, respectively.

 Cost of goods sold

 Cost of goods sold for the year ended December
31, 2023 were $11,391,040, including payroll costs of $1,200,098 and stock-based compensation of $211,981 for employees performing warehouse
and logistics management and quality control testing. Product costs for Brats, Grunt EVOs, and Volcon Youth motorcycles sold during the
period were $1,674,987, $711,807 and $3,236,773, respectively. We recorded a write down of $2,674,352 for Volcon Youth motorcycles to
reduce their costs to the expected net realizable value. We also recorded an expense of $2,070,000 for the termination of the Torrot agreement.
We recorded an expense of $450,282 related to fees paid to cancel purchase orders to reduce raw material quantities. The Company also
recorded an expense of $1,401,490 to write off inventory contributed to our third party manufacturer of the Grunt EVO in return for a
credit that would be provided for each unit purchased up to 900 units.

 Facilities costs for the year ended December 31,
2023 were $509,360 for our warehouse facility and third party warehousing costs. Accrued warranty
costs were $205,069 offset by a reversal of the accrued warranty liability in the amount o f $472,978 for th e
Grunt where the one year warranty for defects had expired and claims were not as high as estimated.

 Cost of goods
sold for the year ended December 31, 2022 were $13,412,820 including labor costs of $1,740,645 for
employees and contractors performing assembly, logistics, quality control testing, and service and warranty of Grunts through August 2022,
when assembly of the Grunt was discontinued, and stock-based compensation of $344,374 f or
share-based awards for these employees. Subsequent to August 2022, labor costs of $453,471 relate
to employee and contractor costs for logistics, quality control testing and service and warranty, including stock-based compensation of
 $234,178 for share-based awards for these employees. Total cost of materials for Grunts during
the year were $5,460,943 which include parts costs for Grunts sold of $3,814,424, adjustments
for excess and obsolete inventory of $460,744 and adjustments to record inventory at its
net realizable value of $1,692,217. We paid $128,137 for fees owed to cancel purchase orders for Grunt parts to reduce quantities
ordered to expected sales demand. Cost of goods sold for Brats and Torrot Youth motorcycles, excluding
shipping, was $235,160 and $206,596, respectively, this includes a $82,627 write-down for Torrot Youth inventory to sell remaining
quantities on hand in anticipation of the Volcon Youth branded motorcycles which arrived in the first quarter of 2023.

 Facilities
costs for the year ended December 31, 2022 were $585,114 for our manufacturing facility and inventory warehousing costs. Shipping costs
and duties/tariffs for inventory purchases and shipments to customers were $2,627,658 which includes an accrual of $350,000 for costs
expected to be incurred to ship our raw materials and work-in-process inventory to our third party manufacturer offset by $242,772 for
shipping fees paid by customers. Accrued warranty costs were $575,608. Depreciation expense of $285,564 was recorded in the year and a
loss on the write-off of property and equipment of $170,657 was recognized for the disposal of manufacturing assets due to the outsourcing
of Grunt assembly.

 In 2024 we expect revenue and
cost of goods sold, other than inventory write downs, Torrot contract termination costs and PO cancellation costs, to increase due to
the expected increase in sales of the Grunt EVO and Stag. Additional cost savings may be realized if the third party manufacturer can
source or manufacture parts at a lower cost. The increase in costs for products will partially be offset by reductions in cost for salaries
and benefits due to reductions in headcount completed in 2023.

 Sales and marketing

 Sales and marketing expenses relate to costs to
increase exposure and awareness for our products and developing our network of U.S. dealers and international distributors.

 Sales and marketing expenses
were $7,405,705 for the year ended December 31, 2023 and were primarily related to expenses associated with promoting our products and
brand of $2,889,421, employee payroll costs of $2,789,652, stock-based compensation of $693,559 for share-based awards granted to employees
and consultants, and travel costs of $294,323 primarily related to costs incurred for travel to build our dealer and distributor network
and to attend events to promote our products. Facilities costs were $168,000. Bad debt expense was $105,687 and professional fees in the
amount of $201,125, mainly related to legal fees in the amount of $74,090 related to entering into international distribution agreements
and sales consultant fees in the amount of $73,132.

 For the year
ended December 31, 2022 sales and marketing expenses were $5,694,556 and include $1,636,619 for promoting our products, employee payroll
costs of $1,949,064, stock-based compensation of $764,517 for share-based awards granted to employees and consultants, $66,625 for professional
fees, $356,958 for facilities costs primarily to operate our now closed dealership in Denver, Colorado, including costs of $148,323 for
closing this store, and travel costs of $294,878 primarily related to costs incurred for travel to build our dealer network.

 We also expect sales expenses to increase as we
begin expanding our international distributors and selling commissions for increased sales of Grunt EVOs and the Stag offset by overall
lower expenses as we seek to reduce costs.

 Product Development Expense

 Product development expenses relate to development
of our products and process to manufacture these products.

 Product development expenses were $7,868,985 for
the year ended December 31, 2023 and were primarily related to expenses associated with employee payroll costs of $1,772,836, stock-based
compensation of $837,271 for share-based awards granted to employees and consultants, professional fees of $298,713 for consultants assisting
with product design and programming, prototype vehicles and parts costs of $3,662,908, testing costs of $240,472 to complete testing of
vehicles including any required regulatory tests, $198,224 for supplies and software and facilities costs of $192,998.

 For the year
ended December 31, 2022, product development expenses totaled $8,456,157 and primarily related to expenses associated with employee payroll
costs of $3,646,927, stock-based compensation of $704,152 for share-based awards granted to employees and consultants, $1,010,895 for
consulting fees for product design, other professional fees of $133,680, primarily for employee recruiting, prototype parts and tooling
costs of $2,201,706, facilities cost of $262,762 and software fees, small equipment, tools and shop supplies of $183,761.

 We expect 2024 product development
costs related to employee costs to remain consistent with 2023. We expect costs to decrease for design and development costs and costs
related to prototype costs for the current version of the Stag since the Stag is essentially ready for production in early 2024. We expect
design and development costs to increase for development of other versions of our UTV lineup being considered for future release. We expect
costs for design and development costs related to the Grunt EVO to decrease since it is in production and we expect costs related to the
design and development of the Runt LT to be minimal since we already have prototypes of the product.

 General and Administrative Expense

 General and administrative expenses relate to costs
for our finance, accounting and administrative functions to support the development, manufacturing and sales of our products.

 For the year ended December
31, 2023, general and administrative expenses were $6,388,007 and were primarily related to expenses associated with employee payroll
costs of $1,613,575, stock-based compensation of $885,113 for share-based awards granted to employees, professional fees of $1,024,774
(including legal fees of $522,334, tax and audit fees of $326,702 and recruiting fees of $50,297), software costs were $444,318, insurance
costs of $1,465,092, facilities costs of $249,074, which includes $85,756 of lease termination costs, annual and special stockholder meeting
costs of $227,439 and board compensation expense of $117,000.

 For the year
ended December 31, 2022, general and administrative expenses were $9,046,778 and were primarily related to expenses associated with employee
payroll costs of $2,497,956, stock-based compensation of $1,211,788, professional fees of $2,197,734, including
legal fees of $1,714,350 and recruiting fees of $173,122, insurance costs of $1,539,798, public company costs of $416,629 excluding legal
fees of $496,364 included above, and software fees of $361,014.

 We expect general and administrative expenses to
remain relatively consistent with the fourth quarter of 2023 over the next several quarters as we have decreased staffing in some administrative
areas but expect costs such as insurance and public company reporting and compliance requirements to offset the employee cost reductions.

 Interest and Other Expenses, net

 Interest and other income/expenses for the year
ended December 31, 2023 was $15,278,462. A loss on extinguishment of the Convertible Notes of $22,296,988 was recognized in the year ended
December 31, 2023 (see Note 6 to the consolidated financial statements). Non-cash interest expense of $4,969,590 was recognized for the
amortization of debt issuance costs and accretion of principal on the Convertible Notes issued in August 2022 prior to extinguishment
of the Convertible Notes and for the May 2023 Notes. A gain on the change in the valuation of derivative financial liabilities and warrant
liabilities of $13,473,218 was recognized in the year ended December 31, 2023 (see Note 7 to the consolidated financial statements). Offering
costs related to the November 2023 public offering for the amount allocated to the issuance of Series A and Series B Warrants in the amount
of $1,444,547.

 Interest and other expenses, net for the year ended
 December 31, 2022 were $2,171,780. Non-cash interest expense of $2,231,403 was recognized
for the amortization of debt issuance costs and accretion of principal on the Convertible Notes issued in August 2022.

 We expect interest expense to decrease in the future
due to the exchange of the May 2023 Notes for Preferred Stock.

 Net Loss

 Net loss for the year ended December 31, 2023 was
$45,071,211, compared to $34,235,405 for the year ended December 31, 2022.

 Liquidity and Capital Resources

 On December 31, 2023, we had cash of $8.2 million,
including $0.2 million of restricted cash and we had a negative working capital of $21.4
million. Since inception in February 2020, we have funded our operations from proceeds from debt and equity offerings.

 Cash used in operating activities

 Net cash used in operating
activities was $29.6 million for the year ended December 31, 2023 and includes all of our operating costs except stock-based compensation
of $2.6 million, write-down of inventory of $4.3 million, depreciation and amortization of $0.2 million, non-cash interest expense for
the amortization of debt issuance costs and accretion of principal on Convertible Notes and May 2023 Notes of $5.0 million, gain on change
in derivative financial liabilities of $13.5 million, loss on extinguishment of Convertible Notes of $22.3 million, bad debt expense of
$0.1 million. Cash used in operating activities includes a decrease in accounts receivable of $0.6 million due to collections, increases
in inventory of $7.6 million due to the purchase of Brats, Volcon Youth motorcycles and purchases of inventory for the Stag after considering
the write down of Grunt and Volcon Youth motorcycle inventory, a decrease of $0.2 million in accounts payable, and an increase of $1.1
million in accrued liabilities due primarily to the accrual recorded for the settlement to Torrot. As of December 31, 2023, we have an
increase of $0.4 million in customer deposits, primarily for orders to be fulfilled from two of our Latin American distributors for shipments
of Brats and Grunt EVOs.

 Net cash
used in operating activities was $33.7 million for the year ended December 31, 2022 and includes all of our operating costs except non-cash
expenses including stock-based compensation of $3.3 million, write-down of inventory and prepaid inventory of $1.7 million,
depreciation and amortization of $0.8 million, non-cash interest expense for the amortization of debt issuance costs and accretion of
principal on Convertible Notes of $2.2 million, amortization of right of use assets and lease costs of $0.4 million and losses on write-off
of assets and leases of $0.6 million. Cash used in operating activities includes increases in accounts receivable of $0.8 million for
sales made to dealers, an increase in inventory of $5.1 million offset by a reduction in inventory deposits of $1.6 million as
we made fewer deposits based on outsourcing of the assembly of the G runt in August 2022 as the third
party manufacturer will purchase raw materials prospectively, a decrease of $2.3 million of customer deposits as we fulfilled all direct
to consumer orders, a decrease of $0.4 million due to timing of payments on accounts payable, a decrease of $0.2 million in accrued liabilities
and an increase in prepaid expenses and other assets of $0.8 million.

 Cash used in investing activities

 Net cash used in investing activities was $0.9
million for the year ended December 31, 2023, consisting of $0.9 million of purchases of equipment and tooling offset by proceeds of $0.1
million received for the sale of two vehicles.

 Net cash used in investing activities was $0.8
million for the year ended December 31, 2022, primarily consisting of $0.3 million of purchases of equipment and tooling related to our
Brat, Grunt, and Runt manufacturing and product development, $0.2 million for the cost of Grunts capitalized as demonstration units, and
$0.2 million related to computers and equipment due to headcount growth prior to headcount reductions that occurred in the third quarter
of 2022.

 Cash provided by financing activities

 Cash provided by financing activities for the
year ended December 31, 2023, was $27.1 million and was related primarily to proceeds from the public offerings of 32,889 shares of our
common stock for net proceeds of $4.6 million, issuance of convertible notes in a private offering with a principal amount of $4.9 million
and net proceeds of $3.9 million, and proceeds from the public offering of 73,913 common stock units and 878,469 pre-funded warrants
units for net proceeds of $16.2 million. We also received proceeds of $1.0 million from the exercise of 9,156 warrants and reduction
of the exercise price for 7,778 warrants.

 Cash provided from financing activities for the year ended
December 31, 2022, was $40.4 million and was related to proceeds received from both the public offering of our common stock in February
2022 where we sold 29,630 shares at $675.00 per share for net cash proceeds of $18.1 million and the issuance of senior Convertible Notes
and Note Warrants in August 2022 for net cash proceeds of $22.3 million.

 Our continuation as a going concern is dependent
upon our ability to attain profitable operations and if necessary, obtain continued financial support from the issuance of debt or equity.
As of December 31, 2023, we had incurred an accumulated deficit of $120.8 million since inception.

 Management anticipates that our cash on hand as
of December 31, 2023 plus the cash expected to be generated from operations will not be sufficient to fund planned operations during the
near term and not beyond one year from the date of the issuance of the financial statements as of and for the year ended December 31,
2023. As such, to continue our operations in the near term we will be required to raise additional financing in the third quarter of 2024.
We do not have commitments for any such financing, and there can be no assurance that such additional funding would be available to the
Company on acceptable terms, or at all. If we are unable to raise additional near-term financing, we will be required to modify or curtail
our operations. These factors raise substantial doubt regarding our ability to continue as a going concern.

 JOBS Act Accounting Election

 The recently enacted JOBS Act provides that an
"emerging growth company" can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities
Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an "emerging growth company"
can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably
elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards
on the relevant dates on which adoption of such standards is required for other public companies.

 We have implemented all new accounting pronouncements
that are in effect and may impact our financial statements and we do not believe that there are any other new accounting pronouncements
that have been issued that might have a material impact on our financial position or results of operations.

 Critical Accounting Policies

 The
preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure
of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual
results could materially differ from those estimates. We have identified the following critical accounting policies:

 Derivative Financial Liabilities and Warrant
Liabilities

 We
do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial
instruments, including conversion features of our convertible debt and warrants issued in connection with our convertible debt, to determine
if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 ASC Topic 815, "Derivatives
and Hedging" ("ASC 815"). The classification of derivative financial instruments, including whether such instruments
should be recorded as liabilities or as equity, is reassessed at the end of each reporting period.

 We accounted for the conversion
features of our New Notes and Exchange Notes and related Note Warrants and Exchange Warrants issued in connection with the New Notes and
Exchange Notes, all issued May 2023, as derivative financial liabilities in accordance with ASC 815. Accordingly, we recognized these
derivative financial liabilities at fair value initially and adjusted them to fair value at each reporting period. These liabilities were
subject to re-measurement at each balance sheet date until exercised or until the conversion feature share price and the warrant exercise
price become fixed, and any change in fair value was recognized in the statement of operations. The fair value of these financial instruments
were initially measured at fair value using a Monte Carlo simulation model and subsequently, the fair value was also estimated using a
Monte Carlo simulation model until they were no longer deemed derivative liabilities as of August 3, 2023. In addition, we made a probability
assessment as to whether our stockholders would approve the adjustment of the conversion prices and exercise prices of the derivative
financial liabilities.

 We
account for the Series A Warrants and Series B Warrants issued in connection with the November 2023 Common Units and Prefunded Warrant
Units as financial liabilities in accordance with ASC 815. Accordingly, we recognize these financial liabilities at fair value initially
and adjust them to fair value at each reporting period. The liabilities are subject to re-measurement at each balance sheet date until
exercised or until warrant exercise price and number of warrants become fixed, and any change in fair value is recognized in the statement
of operations. The fair value of these financial instruments were initially measured at fair value using a Monte Carlo simulation model
and subsequently, the fair value was also estimated using a Monte Carlo simulation model as of December 31, 2023. In addition, we made
a probability assessment as to whether our stockholders would approve the adjustment of the exercise prices of the financial liabilities.
The determination of the fair value of the warrant liability may be subject to change as more current information becomes available and
accordingly the actual results could differ significantly. The Series A Warrants and Series B Warrants are classified as current liabilities
as the timing of their exercise is at the discretion of the warrant holders and the warrants were fully vested as of the date they were
issued.

 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 We are a smaller reporting company as defined by
Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 Report of MaloneBailey, LLP, Houston, TX (PCAOB ID 206)

 Financial Statements

 Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022

 Consolidated Statements of Operations for the years ended December 31, 2023 and 2022

 Consolidated Statements of
 Stockholders Equity (Deficit) for the years ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

 Notes to the Financial Statements

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To the Shareholders and Board of Directors of

 Volcon, Inc.

 Opinion on the Financial Statements

 We have audited the accompanying consolidated
balance sheets of Volcon, Inc. and its subsidiary (collectively, the "Company") as of December 31, 2023 and 2022, and the
related consolidated statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the
related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly,
in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of their operations
and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 Going Concern Matter

 The accompanying financial statements
have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the
Company has suffered recurring losses from operations and has a net working capital deficiency that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements
do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for Opinion

 These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were
we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provides a reasonable basis for our opinion.

 /s/ MaloneBailey, LLP

 www.malonebailey.com

 We have served as the Company's auditor
since 2021.

 Houston, Texas

 March
28, 2024

 VOLCON,
INC.

 CONSOLIDATED
BALANCE SHEETS

 AS OF DECEMBER 31, 2023

 AND 2022

 2023

 2022

 ASSETS

 Current assets:

 Cash

 $
 7,983,346

 $
 10,986,592

 Restricted cash

 210,000

 551,250

 Accounts receivable, net of allowance for doubtful accounts of $ 70,359 and $ 62,451 at December 31, 2023 and 2022, respectively

 203,303

 864,957

 Inventory

 8,973,134

 5,645,883

 Inventory deposits

 258,316

 427,662

 Prepaid expenses and other current assets

 1,904,197

 1,850,666

 Total current assets

 19,532,296

 20,327,010

 Long-term assets:

 Property and equipment, net

 1,258,607

 601,766

 Intangible assets, net

 –

 5,813

 Other long-term assets

 199,281

 285,037

 Right-of-use asset - operating lease

 1,136,213

 1,505,987

 Total assets

 $
 22,126,397

 $
 22,725,613

 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 Current liabilities:

 Accounts payable

 $
 831,184

 $
 1,036,628

 Accrued liabilities

 3,128,906

 2,045,239

 Accrued purchase commitments

 –

 28,600

 Current portion of notes payable

 15,278

 18,670

 Convertible notes, net of issuance costs

 30,149,579

 17,353,748

 Warrant liabilities

 5,971,067

 –

 Right-of-use operating lease liability, short-term

 399,611

 391,117

 Customer deposits

 417,485

 23,471

 Total current liabilities

 40,913,110

 20,897,472

 Notes payable, net of discount and current portion

 69,138

 50,116

 Right-of-use operating lease liability, long-term

 775,170

 1,143,011

 Total liabilities

 41,757,418

 22,090,599

 COMMITMENTS AND CONTINGENCIES

 –

 –

 Stockholders' equity (deficit):

 Preferred stock: $ 0.00001 par value, 5,000,000 shares authorized, no shares outstanding

 –

 –

 Common stock: $ 0.00001 par value, 250,000,000 shares authorized, 1,030,070 shares issued and outstanding as of December 31, 2023, 108,562 shares issued and outstanding as of December 31, 2022

 Additional paid-in capital

 101,175,107

 76,369,939

 Accumulated deficit

 ( 120,806,138
)

 ( 75,734,927
)

 Total stockholders' equity (deficit)

 ( 19,631,021
)

 635,013

 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

 $
 22,126,397

 $
 22,725,613

 CONSOLIDATED STATEMENTS OF OPERATIONS

 FOR THE YEARS ENDED DECEMBER 31, 2023

 AND 2022

 2023

 2022

 Revenue:

 $
 3,260,988

 $
 4,546,686

 Cost of goods sold

 11,391,040

 13,412,820

 Gross margin

 ( 8,130,052
)

 ( 8,866,134
)

 Operating expenses:

 Sales and marketing

 7,405,705

 5,694,556

 Product development

 7,868,985

 8,456,157

 General and administrative expenses

 6,388,007

 9,046,778

 Total operating expenses

 21,662,697

 23,197,491

 Loss from operations

 ( 29,792,749
)

 ( 32,063,625
)

 Other income (expense)

 ( 40,555
)

 87,765

 Interest expense

 ( 4,969,590
)

 ( 2,259,545
)

 Loss from extinguishment

 ( 22,296,988
)

 –

 Issuance costs

 ( 1,444,547
)

 –

 Gain on derivative liabilities and warrant liabilities

 13,473,218

 –

 Total other expense

 ( 15,278,462
)

 ( 2,171,780
)

 Loss before provision for income taxes

)

)

 Provision for income taxes

 –

 –

 $
)

 $
)

 Net loss per common share – basic

 $
 ( 234.37
)

 $
 ( 325.20
)

 Net loss per common share – diluted

 $
 ( 234.37
)

 $
 ( 325.20
)

 Weighted average common shares outstanding – basic

 192,312

 105,275

 Weighted average common shares outstanding – diluted

 192,312

 105,275

 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIT)

 FOR THE YEAR ENDED DECEMBER 31, 2023

 Common stock

 Additional

 Number of

 paid-in

 Accumulated

 Shares

 Amount

 capital

 Deficit

 Total

 Balance at January 1, 2023

 108,562

 $

 $
 76,369,939

 $
 ( 75,734,927
)

 $
 635,013

 Issuance of common stock in public offerings, net of issuance costs of $ 629,900

 32,889

 –

 4,570,085

 –

 4,570,085

 Issuance of common stock for exercise of stock options and vesting of restricted stock units

 –

 25,000

 –

 25,000

 Issuance of common stock units in public offering, net of issuance costs of $ 28,777

 73,913

 255,504

 –

 255,505

 Issuance of pre-funded warrant units, net of issuance costs of
 $ 342,071

 –

 –

 3,037,121

 –

 3,037,121

 Issuance of common stock for exercise of pre-funded warrants

 804,618

 –

 –

 Issuance of common stock for exercise of warrants

 9,156

 –

 680,978

 –

 680,978

 Proceeds received for reduction of warrant exercise price

 –

 –

 346,500

 –

 346,500

 Reclassification of derivative liabilities to equity

 –

 –

 13,262,055

 –

 13,262,055

 Stock-based compensation

 –

 2,627,925

 –

 2,627,925

 –

 –

 –

)

)

 Balance at December 31, 2023

 1,030,070

 $

 $
 101,175,107

 $
 ( 120,806,138
)

 $
 ( 19,631,021
)

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

 FOR THE YEAR ENDED DECEMBER 31, 2022

 Common stock

 Additional

 Number of

 paid-in

 Accumulated

 Shares

 Amount

 capital

 deficit

 Total

 Balance at January 1, 2022

 77,260

 $

 $
 47,803,770

 $
 ( 41,499,522
)

 $
 6,304,249

 Issuance of common stock for public offering, net of issuance costs of $ 1,910,816

 29,630

 –

 18,089,184

 –

 18,089,184

 Issuance of common stock for cashless exercise of warrants

 –

 –

 –

 –

 Issuance of common stock for exercise of stock options and restricted shares

 1,068

 –

 40,000

 –

 40,000

 Stock-based compensation

 –

 3,259,009

 –

 3,259,009

 Forfeiture of performance shares

 ( 14
)

 –

 –

 –

 –

 Issuance of note warrants and underwriter warrants, net of issuance costs of $ 1,003,513

 –

 –

 7,177,976

 –

 7,177,976

 –

 –

 –

)

)

 Balance at December 31, 2022

 108,562

 $

 $
 76,369,939

 $
 ( 75,734,927
)

 $
 635,013

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 FOR THE YEARS ENDED DECEMBER 31, 2023

 AND 2022

 2023

 2022

 Cash flow from operating activities:

 $
)

 $
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Loss on debt extinguishment

 22,296,988

 –

 Gain on change in fair value of financial derivatives and warrant liabilities

 ( 13,473,218
)

 –

 Non-cash interest expense

 4,955,660

 2,231,403

 Loss on write down of inventory and inventory deposits

 4,282,321

 1,692,217

 Stock-based compensation

 2,627,925

 3,259,009

 Bad debt expense

 105,688

 –

 Loss on lease terminations

 85,756

 378,176

 Loss on write-off of property & equipment

 56,509

 250,369

 Write-off of intangible assets

 –

 6,427

 Amortization of right-of-use asset

 369,774

 430,644

 Depreciation and amortization

 249,207

 762,826

 Changes in operating assets and liabilities:

 Accounts receivable

 555,967

 ( 839,372
)

 Inventory

 ( 7,609,564
)

 ( 5,129,085
)

 Inventory deposits

 169,346

 1,553,735

 Prepaid assets and other current assets

 ( 53,531
)

 ( 740,059
)

 Other assets

 –

 ( 37,414
)

 Accounts payable

 ( 205,444
)

 ( 417,475
)

 Accrued liabilities

 1,055,067

 ( 204,769
)

 Right-of-use liabilities - operating lease

 ( 359,347
)

 ( 354,340
)

 Customer deposits

 394,014

 ( 2,254,136
))

 Net cash provided by (used in) operating activities

 ( 29,568,092
)

 ( 33,647,249
)

 Cash flow from investing activities:

 Purchase of property and equipment

 ( 949,722
)

 ( 799,412
)

 Proceeds from sale of vehicles

 89,000

 –

 Net cash used by investing activities

 ( 860,722
)

 ( 799,412
)

 Cash flow from financing activities:

 Repayment of notes payable

 ( 80,394
)

 ( 17,201
)

 Proceeds from issuance of common stock from public offerings, net of issuance costs of $ 629,900

 4,570,085

 –

 Proceeds from issuance of convertible notes and warrants, net of issuance costs of $ 586,968

 3,913,033

 –

 Proceeds from issuance of common stock units, net of issuance costs of $ 28,777

 255,505

 –

 Proceeds from issuance of pre-funded warrant units, net of issuance costs of $ 342,071

 3,037,121

 –

 Proceeds for issuance of Series A and Series B warrants issued with common stock and pre-funded warrant units

 14,336,490

 –

 Proceeds from exercise of warrants

 680,978

 –

 Proceeds from reduction of exercise price of warrants

 346,500

 –

 Proceeds from issuance of common stock from public offering, net of issuance costs of $ 1,910,816

 –

 18,089,184

 Proceeds from issuance of convertible notes, net of issuance costs of $ 2,312,895

 –

 15,122,345

 Proceeds from issuance of warrants to convertible note holders, net of issuance costs of $ 1,003,513

 –

 7,177,976

 Proceeds from exercise of stock options

 25,000

 40,000

 Net cash provided by financing activities

 27,084,318

 40,412,304

 NET CHANGE IN CASH AND RESTRICTED CASH

 ( 3,344,496
)

 5,965,643

 CASH AND RESTRICTED CASH AT BEGINNING OF PERIOD

 11,537,842

 5,572,199

 CASH AND RESTRICTED CASH AT END OF PERIOD

 $
 8,193,346

 $
 11,537,842

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

 2023

 2022

 Supplemental disclosure of cash flow information:

 Cash paid for interest

 $
 15,935

 $
 6,483

 Cash paid for income taxes

 $
 –

 $
 –

 Non-cash transactions

 Recognition of initial right-of-use asset - operating lease

 $
 –

 $
 1,128,609

 Acquisition of property and equipment with note payable

 $
 96,024

 $
 –

 Reclassification of derivative
 liabilities to equity

 $
 13,262,055

 $
 –

 The accompanying notes are an integral
part of these consolidated financial statements.

 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

 NOTE
1 – ORGANIZATION, NATURE OF OPERATIONS AND GOING CONCERN

 Volcon, Inc. ("Volcon" or the "Company")
was formed on February 21, 2020, as a Delaware corporation, under the name Frog ePowersports, Inc. The Company was renamed Volcon, Inc.
on October 1, 2020. Volcon designs and sells all-electric off-road powersport vehicles.

 On January 5, 2021, the Company created Volcon ePowersports, LLC ("Volcon
LLC"), a Colorado wholly-owned subsidiary of the Company, to sell Volcon vehicles and accessories in the U.S. Volcon LLC is no longer
used for selling vehicles and accessories.

 Going Concern

 The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern. The Company has recurring losses and has generated negative
cash flows from operations since inception.

 In August 2022, the Company received net proceeds
of approximately $ 22.3 million for the issuance of convertible notes due February 2024 ("Convertible Notes") and warrants
(see Note 6).

 The Company received net proceeds of approximately
$ 3.9 million for the issuance of additional convertible notes in May 2023 due February 2024 ("New Notes") and warrants. On
the issuance date of the New Notes, the Company exchanged the Convertible Notes for Series A and Series B notes (collectively the "Exchange
Notes"). The Exchange Notes require the Company to have unrestricted and unencumbered cash on deposit of $10 million if the outstanding
principal (and interest, if any) of the Exchange Notes is $15,000,000 or greater as of December 31, 2023 (the September 30, 2023 requirement
under the Convertible Notes was removed). The cash on deposit requirement is reduced dollar for dollar to the extent the outstanding principal
(and interest, if any) of the Exchange Notes is less than $15 million on this date. The Company also exchanged the warrants issued with
the Convertible Notes for new warrants (the "Exchange Warrants") (see Note 6 for further discussion).

 In May 2023, the Company received net proceeds
of approximately $ 4.0 million for the issuance of 26,667 shares of common stock at $ 168.75 per share.

 On September 14, 2023, the holders of the New
Notes and Exchange Notes (collectively the "May 2023 Notes") entered into an agreement to modify the terms to extend the due
date to January 31, 2025. In addition, the requirement to have unrestricted and unencumbered cash on deposit of $10 million if the outstanding
principal (and interest, if any) of the Exchange Notes is $15 million or greater as of December 31, 2023 was amended to reduce the unrestricted
and unencumbered cash on deposit to $5 million if the outstanding principal (and interest, if an) of the Exchange Notes is $15 million
or greater as of June 30, 2024. The cash on deposit requirement is reduced dollar for dollar to the extent the outstanding principal (and
interest, if any) of the Exchange Notes is less than $15 million on this date. The Company may factor up to $10 million of its accounts
receivables provided the factoring lender executed a subordination and intercreditor agreement on terms acceptable to the holders of the
May 2023 Notes, which was completed on October 17, 2023. The Company was also required to perfect a security interest in the assets of
the Company no later than September 22, 2023, which the Company has completed.

 On September 18, 2023, the Company received net
proceeds of approximately $ 571,400 for the issuance of 6,222 shares of common stock at $ 112.50 per share.

 In a series of warrant inducement transactions
from September 29, 2023 to October 30, 2023, as more fully discussed below, the Company raised $ 1,027,478.

 On
November 17, 2023, received net proceeds of approximately $ 16.2 million for the issuance of 73,913 Common Units and 878,469 Pre-Funded
Units. Each Common Unit consists of one share of common stock, a Series A Warrant to purchase one share of common stock and a Series
B Warrant to purchase one share of common stock. Each Pre-Funded Unit consists of one Pre-Funded Warrant to purchase one share
of our common stock, a Series A Warrant and a Series B Warrant. The Pre-Funded Warrants are immediately exercisable and may be exercised
at any time until all of the Pre-Funded Warrants are exercised in full. Subject to stockholder approval, the Series A and Series B Warrants
are subject to adjustments. See further discussion in Note 9.

 In February and March 2024, certain holders of the May 2023 Convertible
Notes issued in May 2023 converted approximately $ 7.4 million of principal to common stock. In March 2024, the holders exchanged the
remaining May 2023 Convertible Notes of $ 24.7 million for Series A convertible preferred stock with a $ 1,000 per share value and an initial
conversation price of $ 1.33 per share for common stock. All covenants from the Convertible Notes were terminated upon this exchange.
In March 2024, certain holders of the Series A convertible preferred stock converted $ 2.3 million shares to 1.7 million shares of common
stock.

 Management anticipates that our cash on hand as
of December 31, 2023 plus cash expected to be generated from operations will not be sufficient to fund planned operations beyond one year
from the date of the issuance of the financial statements as of and for the year ended December 31, 2023. There can be no assurance that
additional funding, if needed, would be available to the Company on acceptable terms, or at all. These factors raise substantial doubt
regarding our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that may result
should the Company be unable to continue as a going concern.

 Nasdaq Compliance

On July 5, 2023, the Company received a notice from Nasdaq that it was not in compliance with Nasdaq's Listing Rule 5550(b)(2),
which requires that it maintain a market value of listed securities ("MVLS") of $35 million. MVLS is calculated by multiplying
the Company's shares outstanding by the closing price of its common stock. On July 6, 2023, the Company received a notice from Nasdaq
that it was not in compliance with Nasdaq's Listing Rule 5550(a)(2), as the minimum bid price of its common stock had been below
$1.00 per share for 30 consecutive business days. On October 13, 2023, the Company completed a 1 for 5 reverse stock split and the Company's
common stock price increased to over $1.00. On October 30, 2023, the Company received a notice from Nasdaq that it had regained compliance
with Rule 5550(a)(2), as the minimum bid price of its common stock was above $1.00 for 10 consecutive business days. On December 19, 2023,
the Company received a notice from Nasdaq that it was again not in compliance with Nasdaq's Listing Rule 5550(a)(2), as the minimum
bid price of its common stock had been below $1.00 per share for 30 consecutive business days.

 On December 26, 2023, the Company was notified by Nasdaq that it is
not in compliance with Nasdaq's Listing Rule 5810(c)(3)(A)(iii) as the closing bid price of our common stock had been below $0.10
for ten consecutive trading days from December 11, 2023 through December 22, 2023 and was subject to delisting on January 2, 2024. On
January 4, 2024, the Company received notice from Nasdaq that we did not meet the MVLS requirement and we were subject to delisting. The
Company submitted a hearing request to Nasdaq's Hearings Department for both of these matters, which stayed the suspension of the
Company's common stock. The Company participated in a hearing with Nasdaq;s Hearings Department on March 26, 2024 and they informed
the Company that it could receive a decision within two weeks from the hearing date, although the timing of the decision is at the discretion
of Nasdaq.

 Impact of Russia and Ukraine Conflict

 On February 24, 2022, Russia invaded Ukraine. The conflict between
Russia and Ukraine could impact the availability of nickel, an element used in the production of lithium-ion cells used in batteries that
power our vehicles. The shortage of these cells could have an impact on our ability to produce vehicles to meet our customers' demands.
In addition, sanctions against Russia could impact the price of elements, including nickel, which are used in the production of batteries
which would result in higher costs to produce our vehicles. These sanctions have also impacted the U.S. and global economies and could
result in an economic recession which could cause a broader disruption to the Company's supply chain and distribution network and
customer demand for our products.

 NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 The significant accounting policies followed in the preparation of
the consolidated financial statements are as follows:

 Basis of Presentation

 The basis of accounting applied is the United States Generally Accepted
Accounting Principles (U.S. GAAP). The accompanying consolidated financial statements include the accounts of the Company and its wholly
owned subsidiary. All intercompany accounts, transactions and balances have been eliminated in consolidation.

 As discussed in Notes 9 and 14, the Company
completed a reverse 1 for 5 stock split on October 13, 2023 and a reverse 1 for 45 stock split on February 2, 2024, all share and
per share amounts have been adjusted to reflect the impact of these reverse stock splits.

 Use of Estimates

 The preparation of the financial statements in
conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of any contingent assets and liabilities as of the dates of the financial statements and the reported amounts of expenses
during the reporting periods.

 Making estimates requires management to exercise
judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed
at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to
one or more future confirming events. Accordingly, actual results could differ significantly from those estimates.

 Cash, Cash Equivalents and Restricted Cash

 Cash and cash equivalents include short-term investments
with original maturities of 90 days or less at the date of purchase. The recorded value of our cash and cash equivalents approximates
their fair value. There were no cash equivalents as of December 31, 2023 or 2022. Restricted cash includes cash restricted as collateral
for the Company's corporate credit cards and a letter of credit with the Company's bank.

 Revenue Recognition

 For sales to dealers or distributors revenue is recognized when transfer
of control of the product is made as there is no acceptance period or right of return. Revenue is measured as the amount of consideration
the Company expects to receive in exchange for transferring control of vehicles, parts, and accessories. Beginning in February 2023 the
Company began selling the Brat E-Bike and Volcon Youth motorcycles directly to consumers in addition to dealers. Revenue for direct to
consumer sales is recognized when transfer of control of the product is made to the consumer.

 Consideration that is received in advance of the
transfer of goods is recorded as customer deposits until delivery has occurred or the customer cancels their order, and the consideration
is returned to the customer. Sales and other taxes the Company collects concurrent with revenue-producing activities are excluded from
revenue. The Company's sales do not presently have a financing component.

 Sales promotions and incentives. The Company
provides for estimated sales promotions and incentives, which are recognized as a component of sales in measuring the amount of consideration
the Company expects to receive in exchange for transferring goods or providing services. Examples of sales promotion and incentive programs
include rebates, distributor fees, dealer co-op advertising and volume incentives. Sales promotions and incentives are estimated based
on contractual requirements. The Company records these amounts as a liability in the balance sheet until they are ultimately paid. Adjustments
to sales promotions and incentives accruals are made as actual usage becomes known to properly estimate the amounts necessary to generate
consumer demand based on market conditions as of the balance sheet date.

 Shipping and handling charges and costs. The
Company records shipping and handling amounts charged to the customer and related shipping costs as a component of cost of goods sold
when control has transferred to the customer.

 Product Warranties

 The Company provides a one-year warranty on vehicles,
and a two-year warranty on the battery pack. The Company accrues warranty reserves at the time revenue is recognized. Warranty reserves
include the Company's best estimate of the projected cost to repair or to replace any items under warranty, based on actual warranty
experience as it becomes available and other known factors that may impact the evaluation of historical data. The Company reviews its
reserves quarterly to ensure that the accruals are adequate to meet expected future warranty obligations and will adjust estimates as
needed. Factors that could have an impact on the warranty reserve include the following: changes in manufacturing quality, shifts in product
mix, changes in warranty coverage periods, product recalls and changes in sales volume. Warranty expense is recorded as a component of
cost of goods sold in the statement of operations and is recognized as a current liability.

 Inventory and Inventory Deposits

 Inventories and prepaid inventory deposits are
stated at the lower of cost (first-in, first-out method) or net realizable value.

 Certain vendors require the Company to pay an
upfront deposit before they manufacture and ship the Company's parts or accessories. These payments are classified as prepaid inventory
deposits on the balance sheet until title and risk of loss transfers to the Company, at which time they are classified as inventory.

 Raw materials inventory costs include the cost
of parts, including duties, tariffs, and shipping. Work-in-process and finished goods include the cost of parts, labor and manufacturing
overhead costs associated with the assembly of the vehicle. Finished goods also include accessories for the vehicle and branded merchandise
such as hats and shirts.

 Through August 2022 the Company assembled the Grunt motorcycle in a
leased facility. The Company ceased assembly operations at the end of August and outsourced the assembly of the Grunt to a third part y.

 In May 2023,
 the Company transferred substantially all of its raw materials and work-in-process inventory for the Grunt to the third party
manufacturer in the second quarter of 2023. Title to the inventory transferred to the third party manufacturer and the manufacturer provides
the Company with a credit towards future purchases of the Grunt EVO.

 Property and Equipment

 Property and equipment are valued at cost. Additions
are capitalized and maintenance and repairs are charged to expense as incurred. Gains and losses on dispositions of equipment are reflected
in operations. Depreciation is recorded using the straight-line method over the estimated useful lives of the assets as follows:

 Schedule of estimated useful lives of the
 assets

 Category

 Estimated

Useful Lives

 Machinery, tooling and equipment

 3 - 7 years

 Vehicles

 5 years

 Internal use manufactured vehicles

 1 year

 Furniture & Fixtures

 5 years

 Computers

 3 years

 Leasehold improvements are depreciated over the
shorter period of their estimated useful life or term of the lease.

 Long-Lived Assets

 The Company's long-lived assets are reviewed
for impairment whenever events or changes in circumstances indicate that the historical carrying cost value of an asset may no longer
be appropriate. The Company assesses recoverability of the asset by comparing the undiscounted future net cash flows expected to result
from the asset to the carrying value. If the carrying value exceeds the undiscounted future net cash flows of the asset, an impairment
loss is measured and recognized. An impairment loss is measured as the difference between the net book value and the fair value of the
long-lived asset.

 Leases

 Right-of-use ("ROU") assets represent
the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation
to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on
the estimated present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on
the balance sheet; the Company recognizes lease expenses for these leases on a straight-line basis over the lease term. The Company does
not separate non-lease components from the lease components to which they relate, and instead accounts for each separate lease and non-lease
component associated with that lease component as a single lease component.

 ASC 842 defines initial direct costs as only the
incremental costs of signing a lease. Initial direct costs related to leasing that are not incremental are expensed as general and administrative
expenses in our statements of operations.

 The Company's operating lease agreements
primarily consist of leased real estate and are included within ROU assets – operating leases and ROU lease liabilities –
operating leases on the balance sheets. The Company's lease agreements may include options to extend the lease, which are not included
in minimum lease payments unless they are reasonably certain to be exercised at lease commencement. The Company's leases do not provide
an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in
determining the present value of lease payments.

 Research and Development Expenses

 The Company records research and development expenses
in the period in which they are incurred as a component of product development expenses.

 Income Taxes

 Deferred taxes are determined utilizing the "asset
and liability" method, whereby deferred tax asset and liability account balances are determined based on the differences between
financial reporting and the tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The Company provides a valuation allowance, when it's more likely than not that deferred
tax assets will not be realized in the foreseeable future. Deferred tax liabilities and assets are classified as current or non-current
based on the underlying asset or liability or if not directly related to an asset or liability based on the expected reversal dates of
the specific temporary differences.

 Fair Value of Financial Instruments

 ASC Topic 820 Fair Value Measurements and Disclosures ("ASC Topic 820") provides a framework for measuring fair value
in accordance with generally accepted accounting principles.

 ASC Topic 820 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. ASC Topic 820 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on
market data obtained from independent sources (observable inputs) and (2) an entity's own assumptions about market participant assumptions
developed based on the best information available in the circumstances (unobservable inputs).

 The fair value hierarchy consists of three broad
levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and
the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC Topic 820 are described as
follows:

 Level 1 — Unadjusted quoted prices in active markets for identical assets or liabilities that are accessible at the measurement date.

 Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

 Level 3 — Inputs that are unobservable for the asset or liability.

 The following section describes
the valuation methodologies that the Company used to measure different financial instruments at fair value.

 Debt

 The fair value of the Company's debt approximated
the carrying value of the Company's debt as of December 31, 2023 and 2022. Factors that the Company considered when estimating
the fair value of its debt included market conditions, and term of the debt. The level of the debt would be considered as Level 2.

 The Company relies on the guidance
provided by ASC Topic 480, Distinguishing Liabilities from Equity, to classify certain convertible instruments. The Company first
determines whether a financial instrument should be classified as a liability. The Company will determine the liability classification
if the financial instrument is mandatorily redeemable, or if the financial instrument, other than outstanding shares, embodies a conditional
obligation that the Company must or may settle by issuing a variable number of its equity shares.

 The Company accounts for derivative
instruments in accordance with ASC Topic 815, Derivatives and Hedging ("ASC Topic 815"), and all derivative instruments
are reflected as either assets or liabilities at fair value on the consolidated balance sheets. The Company uses estimates of fair value
to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction
between able and willing market participants. In general, the Company's policy in estimating fair values is to first look at observable
market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are
used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit
spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different
valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and
may not be realizable. The Company categorizes its fair value estimates in accordance with ASC Topic 820, based on the hierarchical framework
associated with the three levels or price transparency utilized in measuring financial instruments at fair value as discussed above.

 Once the Company determines
that a financial instrument should not be classified as a liability, the Company determines whether the financial instrument should be
presented between the liability section and the equity section of the balance sheet ("temporary equity"). The Company will
determine temporary equity classification if the redemption of the financial instrument is outside the control of the Company (i.e., at
the option of the holder). Otherwise, the Company accounts for the financial instrument as permanent equity.

 Initial Measurement

 The Company records its financial
instruments classified as a liability, temporary equity or permanent equity at issuance at the fair value, or cash received.

 Subsequent Measurement -
Financial instruments classified as liabilities

 The Company records the fair
value of its financial instruments classified as liabilities at each subsequent measurement date. The changes in fair value of its financial
instruments classified as liabilities are recorded as other expense/income. The Monte Carlo simulation is used to determine the fair value
of derivatives for instruments with embedded conversion features and for free standing warrants as discussed further in Note 7.

 Additional Disclosures Regarding Fair Value
Measurements

 The carrying value of cash,
accounts receivable, inventory, other assets, and accounts payable and accrued expenses approximate their fair value due to the short-term
maturity of those items.

 Warrant Liabilities and Convertible Liabilities

 The fair value of the derivative
liabilities and warrant liabilities is classified as Level 3 within the Company's fair value hierarchy. Refer to Note 7, Derivative
Instruments, for further discussion of the measurement of fair value of the derivatives and their underlying assumptions.

 Stock-Based Compensation

 The Company has a stock-based incentive award
plan for employees, consultants and directors. The Company measures stock-based compensation at the estimated fair value on the grant
date and recognizes the amortization of stock-based compensation expense on a straight-line basis over the requisite service period, or
when it is probable criteria will be achieved for performance-based awards. Fair value is determined based on assumptions related to the
fair value of the Company common stock, stock volatility and risk-free rate of return. The Company has elected to recognize forfeitures
when realized.

 Concentration Risk

 The Company outsources certain portions of product
design and development for its vehicles to third parties. In addition, the Company has outsourced the manufacturing of all of its vehicles
to third party manufacturers, including one manufacturer for two of its vehicles, the Stag and Grunt EVO, and this third party is also
performing product design and development services on the Stag.

 One supplier provides the battery and drivetrain
components for the Company's utility terrain vehicle, the Stag. The components are critical to the operation of the Stag. The Company
also sources some of the other components from third party suppliers and the third party manufacturer sources other components from third
party suppliers or fabricates them from materials sourced from third parties.

 On January 8, 2024, the Company notified the manufacturer
of the Volcon Youth motorcycles that it was terminating the co-branding and distribution agreement with them due to lower than anticipated
sales of these units. In March 2024, the Company agreed to allow the manufacturer
to keep all fully paid for units manufactured and held by the manufacturer and pay cash of $ 2,070,000 which includes a payment of $370,000
in March 2024 and $100,000 monthly for seventeen months starting April 2024. The Company has recorded this amount in the 2023 financial
statements. As discussed below, the Company has written down this inventory to its estimated net realizable value and accrued the cash
settlement offer.

 Recently Issued Accounting Pronouncements

 In June 2016, the Financial Accounting
Standards Board ("FASB") issued Accounting Standards Update 2016-13, "Financial Instruments - Credit Losses
(Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). ASU 2016-13 requires
companies to measure credit losses utilizing a methodology that reflects expected credit losses and requires a consideration of a
broader range of reasonable and supportable information to inform credit loss estimates. ASU 2016-13 is effective for fiscal years
beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2016-13 effective
January 1, 2023. The Company determined that the update applied to trade receivables, but that there was no material impact to the
consolidated financial statements from the adoption of ASU 2016-13.

 From time to time, new accounting pronouncements
are issued by the Financial Accounting Standard Board or other standard setting bodies that the Company adopts as of the specified effective
date. The Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact
on the Company's financial position or results of operations upon adoption.

 NOTE 3 – INVENTORY

 Inventory consists of the following:

 Schedule of inventory

 December 31,
 2023

 December 31,
 2022

 Raw materials

 $
 6,770,892

 $
 3,060,160

 Work-in-process

 –

 439,839

 Finished goods

 2,202,242

 2,145,884

 Total inventory

 $
 8,973,134

 $
 5,645,883

 In June 2023, the Company wrote down all remaining
Torrot branded inventory in the amount of $ 84,000.
During 2023, the Company wrote down the Volcon co-branded Torrot youth motorcycles in the amount of $ 2,674,352
 to reduce their cost to the estimated net realizable value. The Company also wrote down all remaining Grunt inventory of $ 1,564,643
upon transfer of the inventory to the Company's third party manufacturer. The Company has purchase commitments
for future payments due for inven tory of $ 1,894,842.

 NOTE 4 – LONG – LIVED ASSETS

 Property and Equipment

 Property and equipment consist of the following:

 Schedule of property and equipment

 December 31,
 2023

 December 31,
 2022

 Machinery, tooling and equipment

 $
 1,015,568

 $
 352,137

 Vehicles

 213,528

 156,648

 Internal use manufactured vehicles

 22,906

 274,385

 Fixtures & furniture

 90,768

 50,768

 Leasehold improvements

 44,663

 44,663

 Computers

 221,571

 228,671

 1,609,004

 1,107,272

 Less: Accumulated depreciation

 ( 350,397
)

 ( 505,506
)

 Total property and equipment

 $
 1,258,607

 $
 601,766

 Depreciation expense for the year ended December
31, 2023 and 2022 w as $ 243,394 and $ 757,013,
respectively.

 NOTE 5 – NOTES PAYABLE

 In December 2020, the Company entered into a financing
arrangement for $ 75,702 with an interest rate of 8.64 % for a vehicle. The Company was required to make monthly payments of $ 1,211 over
 72 months. In April 2021, the Company entered into a financing arrangement for $ 30,942 with an interest rate of 7.64 % for a vehicle. The
Company was required to make monthly payments of $ 753 over 48 months. The Company sold both vehicles in the three months ended March 31,
2023 and paid off these notes.

 In March 2023, the Company entered into two financing
arrangements to purchase two vehicles. The total principal of these arrangements is $ 96,024 with interest rates of 11.44 % and 8.63 % and
monthly payments totaling $ 1,923 are due through February 2028 and $908 per month until February 2029. The vehicles are collateral for
these arrangements.

 The following table provides the maturities of
notes payable as of December 31, 2023:

 Schedule of maturities for notes payable

 2024

 $
 23,073

 2025

 23,073

 2026

 23,073

 2027

 23,073

 2028

 12,927

 2029

 1,816

 Total future payments

 107,035

 Less: Interest

 ( 22,619
)

 Total notes payable

 84,416

 Less current portion

 ( 15,278
)

 Long-term notes payable

 $
 69,138

 NOTE 6 - CONVERTIBLE NOTES

 On August 24, 2022, the Company issued senior
convertible notes with an aggregate principal amount of $ 27,173,913 due February 24, 2024. The Convertible Notes had an initial conversion
price of $ 506.25 per share of common stock ( 53,677 total shares if fully converted) and were issued with an original issue discount of
 8.0 % and did not bear interest unless an event of default occurred, upon which interest would have accrued at 10 % per annum. The holders
of the Convertible Notes could have converted any portion of the principal at any time during the term of the notes. The holders of the
Convertible Notes also received fully vested warrants (the "Note Warrants") to purchase 40,260 shares of the Company's
common stock at an initial exercise price of $ 641.25 per share. The conversion and warrant exercise prices were subject to adjustment
if the Company declared a stock dividend, stock split or recapitalization. The Company received net cash proceeds, after issuance costs
(excluding the value of the warrants issued to the placement agent as discussed below) of $ 22,300,321.

 Company allocated the net proceeds received from the issuance of the
Convertible Notes and Note Warrants based on the relative fair values of each resulting in net proceeds of $ 15,122,345 being allocated
to the Convertible Notes recorded as a current liability in the balance sheet and net proceeds of $ 6,561,247 being allocated to the Note
Warrants which was recorded in equity. The Company recorded non-cash interest expense through May 24, 2023 (see below for discussion of
issuance of additional convertible notes) to accrete the allocated value of the Convertible Notes using the effective interest method
and an interest rate of 39.6 %. The Company incurred debt issuance costs of $ 3,316,409 upon issuance of the Convertible Notes, which includes
$ 616,730 for the fair value of the warrants issued to the placement agent of the Convertible Notes
as further described in Note 9. These debt issuance costs were amortized as additional interest expense through May 24, 2023. Interest
expense recorded for the Convertible Notes for the years ended December 31, 2023 and 2022 were $ 2,913,632 and $ 2,231,403, respectively.

 On May 24, 2023, the Company issued additional
senior convertible notes ("New Notes") with an aggregate principal amount of $ 4,934,783 due February 24, 2024 to the same investors
of the Convertible Notes. The New Notes had an initial conversion price of $ 571.50 per share of common stock, which was subject to adjustment
to $168.75 upon stockholder approval (29,244 total shares if fully converted at $168.75 per share, stockholder approval was received on
August 3, 2023). The conversion price is also subject to further adjustment if the Company completes an equity or convertible note offering
with a price below $168.75, or completes a stock split, reverse stock split or recapitalization where the lowest day's volume weighted
average price ("VWAP") of the Company's stock price is below $168.75 in the five days following the stock split, with
a floor price of $0.22 (subject to stockholder approval, which was obtained on August 3, 2023). The conversion price is also subject to
further adjustment if the Company completes an equity or convertible note offering with a price below $168.75. The New Notes were issued
with an original issue discount of 8.8 % and do not bear interest unless an event of default has occurred, upon which interest accrues
at 10% per annum.

 The holders of the New Notes also received fully
vested warrants (the "New Warrants") to purchase 24,155 shares of the Company's common stock at an initial exercise
price of $ 245.25 per share.

 Concurrent with the issuance of the New Notes,
the Company exchanged the Convertible Notes into two new notes, Series A Notes and Series B Notes both due February 24, 2024 (collectively
the "Exchange Notes" and collectively with the New Notes the "May 2023 Notes"). The aggregate principal amount
of Series A Notes is $ 3,690,422 and these are convertible into the Company's common stock at an initial conversion price of $ 168.75
per share ( 21,870 total shares if fully converted). The aggregate principal amount of the Series B Notes is $ 23,483,491 and were initially
convertible into the Company's common stock at an initial conversion price of $ 245.25 per share ( 95,754 total shares if fully converted)
but were subject to adjustment to $ 168.75 upon stockholder approval ( 139,162 total shares if fully converted at $168.75 per share), which
approval was received on August 3, 2023.

 The Company also exchanged the 40,258 Note Warrants
with an exercise price of $641.25 per share issued with the Convertible Notes in August 2022 for 75,814 warrants which had an initial
exercise price of $245.25 per share (the "Exchange Warrants"), and which exercise price was adjusted to $168.75 per share
upon stockholder approval, which approval was received on August 3, 2023. The Exchange Warrants expire August 24, 2027.

 In September 2023, the Company completed a public
offering and sold 6,223 shares of common stock at $ 112.50 per share. The holders of the May 2023 Notes waived their right to reduce the
conversion price to the equity issuance price and agreed to reduce the conversion price to $123.75 per share. The exercise price of the
May 2023 Warrants were reduced to $ 112.50 per share as a result of the public offering.

 In September 2023, the holders of the May 2023 Notes agreed to modify
the due date of these notes to January 31, 2025. See discussion of further modifications below. The Company also executed a security
interest to the holders for substantially all of the assets of the Company.

 The May 2023 Notes contain certain conversion limitations,
providing that no conversion may be made if, after giving effect to the conversion, the holder, together with any of its affiliates,
would own in excess of 9.99% of the Company's outstanding shares of common stock after giving effect to such conversion. The Company
can force conversion of the Series A and Series B Notes at any time if the weighted average price of the Company's common stock
for ten consecutive trading days equals or exceeds $263.25 or $380.25, respectively, subject to the share limitations described above.
In addition to default interest of 10% accruing on the May 2023 Notes, the holders may require the Company to redeem a portion or all
of the outstanding May 2023 Notes.

 Events of default for the May 2023 Notes are defined in the note agreements and include the following:

 Failure of the Company to file a registration statement, and have declared effective to register the shares of the Company's common stock within a specified period (the Company has met this requirement as of September 28, 2023)

 Suspension of trading, or failure to be listed, of the Company's common stock on an eligible market, as defined, for a period of two consecutive trading days or an aggregate of ten trading days in a 365 day period

 Failure to deliver shares of the Company's common stock within five days following a conversion notification

 Failure to reserve shares of the Company's common stock for the conversion of the May 2023 Notes and May 2023 Warrants

 Any acceleration prior to maturity of any indebtedness of the Company, declaration of bankruptcy, or court ordered bankruptcy

 Final judgment or judgments for payment aggregating in excess of $250,000 are rendered against the Company not covered by insurance or indemnity and are not discharged or stayed pending appeal within 60 days of judgment

 Breach of any representation, warranty or covenant by the Company to the transaction documents of the May 2023 Notes and Exchange Warrants

 Any material damage to, or loss, theft or destruction of a material amount of the property of the Company

 Failure to remove any restrictive legends on any shares of the Company's common stock issued to the holders of the May 2023 Notes

 Electronic transfer of shares of the Company's common stock is not available

 As of December 31, 2023, the Company was in compliance
with the above covenants.

 The May 2023 Notes originally required the Company to have unrestricted
and unencumbered cash on deposit of $10 million if the outstanding principal (and interest, if any) of the May 2023 Notes is $15 million
or greater as of December 31, 2023. The cash on deposit requirement is reduced dollar for dollar to the extent that the outstanding principal
(and interest, if any) of the May 2023 Notes is less than $15 million on December 31, 2023. In September 2023, the note holders modified
this requirement to change the date from December 31, 2023 to June 30, 2024 and reduced the cash on deposit requirement to $ 5 million.
All other provisions for this cash on deposit requirement remain unchanged.

 As discussed in Note 9, the Company completed
a 1 for 5 reverse stock split on October 13, 2023 and the lowest day's VWAP in the five days following the reverse split was $61.605
per share and the conversion price of New Notes and Exchange Notes, and the exercise price of the New Warrants and Exchange Warrants were
reduced to $ 61.605 per share effective October 20, 2023.

 The conversion prices of the Exchange Notes, and
the exercise prices of the New Warrants and Exchange Warrants (collectively the "May
2023 Warrants") are subject to further adjustment in the event that the Company issues additional common stock, stock options, warrants
or convertible notes with prices below the exercise price in effect at the time of issuance, or completes a stock split, reverse stock
split or recapitalization where the lowest day's VWAP of the Company's stock price is below $61.605 in the five days following
the stock split with a floor o f $0.22 per share. See Note 14 for discussion of the impact
of the 1 for 45 reverse split on February 2, 2024.
Also in September 2023, the Company and the holders of the Exchange Warrants entered into a warrant inducement agreement whereby the Exchange
Warrant holders agreed to exercise 6,824 Exchange Warrants at a reduced exercise price of $78.75 per share. The Company issued the holders
 6,824 warrants ("Reload Warrants") with an exercise price of $ 112.50 per share. The Reload Warrants are immediately exercisable
for unregistered shares of the Company's common stock and have the same terms as the May 2023 Warrants and expire August 24, 2027.
The Company recognized equity issuance costs of $ 216,855 for the issuance of the Reload Warrants.

 Holders of the May 2023 Notes, the May 2023 Warrants and Reload Warrants
(collectively the "Holders") do not have voting rights to the extent they have not converted their notes or exercised their
warrants.

 The May 2023 Warrants and Reload Warrants contain
certain conversion limitations, providing that a holder thereof may not exercise such warrants to the extent that, if after giving effect
to such conversion, the holder or any of its affiliates would beneficially own in excess of 4.99% of the outstanding shares of the Company's
common stock immediately after giving effect to such exercise. The May 2023 Warrants and Reload Warrants provide the holders the right
to exercise these warrants on a non-cash basis if the Company does not have an effective registration statement for the underlying shares
of common stock.

 The Company has evaluated the issuance of the
New Notes and Exchange Notes and related warrants and determined that the Convertible Notes were extinguished based on the conclusion
that the terms of the New Notes and Exchange Notes are substantially different from the Convertible Notes in accordance with ASC 470,
 Debt. In addition, the Company recognized a loss on the extinguishment of the Convertible Notes based on the carrying value of
the Convertible Notes at the transaction date, plus gross proceeds received from the issuance of New Notes and New Warrants, less the
fair value of the i) New Notes and conversion option, ii) New Warrants, iii) Exchange Notes and conversion options, and iv) Exchange
Warrants. The resulting loss on extinguishment was $ 22,296,988, which included the unamortized issuance costs of $ 1,330,296 of the Convertible
Notes as of the date of the issuance of the New Notes. The fair value of the May 2023 Notes was estimated based on the future cash flows
discounted at an interest rate of 14.9%. The May 2023 Notes were recorded at their initial fair values as follows:

 Schedule of convertible notes

 Fair Value

 Principal Amount

 New Notes

 $
 4,410,058

 $
 4,934,783

 Series A Exchange Notes

 3,298,012

 3,690,422

 Series B Exchange Notes

 20,986,449

 23,483,891

 Total May 2023 Notes

 $
 28,694,519

 $
 32,109,096

 The Company recognized interest expense o f
$ 1,739,123 i n the year ended December 31, 2023 for the accretion of the discount on the May 2023 Notes during the periods.

 The Company estimated the fair value of the conversion
features of the New Notes, Exchange Notes, New Warrants and Exchange Warrants as of May 24, 2023 as discussed in Note 7 below.

 The Company incurred debt issuance costs of $ 586,968
upon issuance of the New Notes and New Warrants. The Company is amortizing these issuance costs as additional interest expense over the
remaining term of the New Notes. The Company recognized interest expense of $ 302,955 f or
the amortization of these issuance costs for the year ended December 31, 2023.

 As of December 31, 2023, there were no conversions of the May 2023
Notes. As discussed in Note 14, on March 4, 2024, the Company exchanged the May 2023 Notes for Series A preferred stock. As a result,
there are no remaining covenants related to the May 2023 Notes that the Company must comply with and the security interest on the assets
of the Company has been released by the noteholders.

 NOTE 7 - DERIVATIVE FINANCIAL INSTRUMENTS AND
WARRANT LIABILITIES

 May 2023 Notes and May 2023 Warrants

 As discussed in Note 6, the Company recognized
a loss on the extinguishment of the Convertible Notes based on the fair values of the May 2023 Notes including the conversion feature,
and the May 2023 Warrants. The Company determined that there was a derivative liability associated
with the conversion features in the May 2023 Notes due to the conversion price being subject to stockholder approval in the conversion
feature. Therefore, the Company has separated conversion features from the May 2023 Notes and has recorded them at fair value and will
continue to adjust them to fair value until shareholder approval is received as the conversion price is then only adjusted based on anti-dilutive
provisions. The Company has also determined that the May 2023 Warrants are derivative liabilities due to the potential adjustment in the
exercise prices being subject to stockholder approval. Once shareholder approval is received, the exercise price of the warrants only
adjusts based on anti-dilutive provisions.

 The fair
value of the conversion features and warrant liabilities were calculated using a Monte Carlo simulation and the following assumptions
and methodologies:

 Schedule of assumptions

 May 24, 2023

 August 3, 2023

 Conversion Feature Liabilities

 Company stock price on valuation date

 $
 157.50

 $
 123.975

 Volatility (closing prices of guideline comparable public companies)

 86.3%

 84.1%

 Conversion price per share

 $
 168.75

 $
 168.75

 Note term (years)

 0.76

 0.56

 Risk free interest rate

 5.1%

 5.4%

 Warrant Liabilities

 Company stock price on valuation date

 $
 157.50

 $
 123.975

 Volatility (closing prices of guideline comparable public companies)

 119.2%

 115.0%

 Conversion price per share

 $
 168.75

 $
 168.75

 Warrant term (years)

 4.25

 4.06

 Risk free interest rate

 3.8%

 4.3%

 In addition to the above factors, the Company
also used a probability assessment for the initial and August 3, 2023 valuation to evaluate whether stockholder approval would be received
to lower the conversion and exercise prices. The Company utilized a 50/50 assessment that stockholders would or would not approve the
lower conversion and exercise price. Management notes that at the time of the assessment, the stockholder vote had not yet started therefore
there was no data to determine whether one scenario was more likely than another. Since the stockholders approved the lower conversion
and exercise price on August 3, 2023, no probability assessment was used.

 Based on the above factors, the estimated fair value
of the Company's financial derivative liabilities carried at fair value at May 24, 2023 and August 2, 2023 is as follows:

 Schedule of fair value of derivative liabilities

 May 24, 2023

 August 3, 2023

 Conversion Feature - New Notes

 $
 663,096

 $
 557,168

 Conversion Feature - Series A Exchange Notes

 970,805

 416,672

 Conversion Feature - Series B Exchange Notes

 4,324,792

 2,651,436

 New Warrants

 3,123,682

 2,445,244

 Exchange Warrants

 9,287,474

 7,191,535

 Total

 $
 18,369,849

 $
 13,262,055

 On August
3, 2023, stockholders approved the adjustment of the conversion price of the New Notes and Exchange Notes and the exercise price of
the New Warrants and Exchange Warrants. The conversion and exercise prices can adjust to a floor of $0.22 per share based on certain
events defined in the agreements related to these instruments. The Company has concluded that as of August 3, 2023, the conversion
feature of the May 2023 Notes and the May 2023 Warrants are no longer derivative liabilities and reclassified them to equity. The Company
recognized a gain of $ 5,107,794
for the change in the fair values of the conversion features of the May 2023 Notes for the year ended December 31, 2023.

 Series A and Series B Warrants

 As discussed
in Note 9 below, the Company issued Series A and Series B Warrants (the "November 2023 Warrants") in connection with the
sale of common units and pre-funded warrant units. Under the terms of the November 2023 Warrants, the number and exercise price are subject
to adjustment if the Company completes certain transactions specified in these warrant agreements. Such adjustments are subject to shareholder
approval, and some will result in a change in the exercise price and number of warrants, and others will only result in the change in
exercise price due to standard anti-dilution provisions.

 The Company
has determined that these warrants should be classified as liabilities and has used a Monte Carlo simulation to estimate the fair values
until shareholder approval is received and the number of warrants becomes fixed. The following assumptions were used in the valuations:

 Schedule of warrants assumptions

 November 17, 2023

 Company stock price on valuation date

 $
 9.864

 $
 4.46

 Volatility

 138.2%

 141.4%

 Risk free interest rate

 4.33%

 3.78%

 Dividend yield

 0.00%

 0.00%

 Warrant term (years)

 5.0

 4.9

 Time to future transaction (years)

 0.75

 0.63

 Future transaction probability

 75%

 75%

 In addition to the above factors, the Company also used a probability
assessment for the initial and December 31, 2023 valuation to evaluate whether stockholder approval would be received on January 12, 2024
to lower the conversion and exercise prices. Management notes that at the time of the assessment, the stockholder vote had not yet started
but there was a requirement in the offering that the board of directors, management, and a significant shareholder vote in favor of these
adjustments which included approximately 20.1% of the shares outstanding as of the transaction date. Further, significant investors in the
transaction held shares acquired prior to the record date for eligible shareholders to vote. Although these same investors could not vote
the shares received in the November 17, 2023 offering, they could abstain from voting those shares for the shareholder vote and such shares
would count towards whether a quorum of shares was received to hold the special meeting for the shareholder approval. Finally, management
notes that approval was overwhelmingly positive to adjust the conversion price for the May 2023 Notes and May 2023 Warrants and exercise
prices. The Company concluded that it was 100% likely that stockholders would approve the provisions to adjust the number of warrants
and exercise price.

 Based on
the above factors, the estimated fair value of the Series A and Series B Warrant liabilities at November 17, 2023 and December 31, 2023
is as follows:

 Schedule of estimated fair value

 November 17, 2023

 Series A Warrant

 $
 0.6576

 $
 0.2970

 Series B Warrant

 $
 0.1996

 $
 0.0799

 The estimated
fair values as of November 17, 2023 were used to allocate the gross proceeds from the issuance of the common units and pre-funded warrant
units resulting in a value of $ 10,990,530 and $ 3,345,961 being allocated to the Series A and Series B warrants, respectively. An allocation
of the issuance costs from the offering was made based on the relative fair values of the common stock, pre-funded warrants, Series A
and Series B warrants and issuance costs of $ 1,451,249 that were allocated to the Series A and Series B Warrants were expensed.

 Based on the above factors, the estimated fair value of the Company's
warrant liabilities carried at fair value at November 17, 2023 and December 31, 2023 is as follows:

 Schedule of warrant liabilities at fair value

 November 17, 2023

 Series A Warrants

 $

 10,990,530

 $

 4,705,245

 Series B Warrants

 3,345,961

 1,265,822

 Total

 $

 14,336,491

 $

 5,971,067

 Based
on the change in the estimated fair value of the Series A and Series B warrants from November 17, 2023 to December 31, 2023, the Company
recorded a gain of $ 8,365,424.

 The following represents the activity associated
with the May 2023 Notes, May 2023 Warrants and Series A and Series B Warrants for the year ended December 31, 2023:

 Schedule of derivative activity

 May 2023 Notes and May 2023 Warrants

 Series A and Series B Warrants

 Fair value on issuance date

 $
 18,369,849

 14,336,491

 Gain on changes in fair value

 ( 5,107,794
)

 ( 8,365,424
)

 Reclassification to equity

 ( 13,262,055
)

 –

 Balance at December 31, 2023

 $
 –

 $
 5,971,067

 The total gain on the changes in fair value
of $ 13,473,218 is recorded in other income (expense) in the consolidated statement of operations.

 NOTE 8 – RELATED PARTY TRANSACTIONS

 During 2022, the Company issued purchase orders
and made prepayments for prototype parts o f $ 21,860 to a vendor that Pink Possum, LLC ("Pink
Possum"), an entity controlled by Mr. Okonsky, one of the Company's founders, Chairman of the Board and Chief Technology Officer,
holds an equity interest of 25% as of December 31, 2023. This vendor is expected to provide
additional prototype and product parts for a prototype of an upgraded version of the Stag expected to be released in the future.

 In November 2020, the Company entered into an
operating lease with an entity controlled by the Company's two founders for its future headquarters and production facility in Liberty
Hill, Texas. The lease had a lease term of 5 years, and monthly payments ranging from approximately $15,000 per month to $17,000 per month
over the lease term and gave the Company access to the land for use in testing its vehicles prior to the construction of any facilities.
In February 2021, the Company entered into an amendment of the lease related to its future headquarters to expand the leased premises.
The Company paid an additional security deposit of $139,230 and additional prepaid rent of $315,588. The total minimum lease payments
under the amended lease totaled approximately $3,930,170.

 In October 2021, the Company began discussions
for an additional amendment to the lease, in anticipation of manufacturing the Stag at this location, which would have resulted in the
monthly payment increasing to $100,000 for the first year of the lease and increasing annually throughout the term of the lease to $107,000
in the final year. Monthly payments for the initial lease and the amended agreement would have begun at the time a certificate of occupancy
was received by the landlord.

 The Company evaluated the cost of this facility
in relation to other lower cost options, including having a third party manufacturer the Stag, and determined that it would be in the
best interest of the Company to terminate this lease. On April 27, 2022, the Company informed the landlord that it would be terminating
the lease. On May 27, 2022, the landlord notified the Company that the landlord would refund $85,756 of the prepaid rent and security
deposit balance of $601,818 paid by the Company. The unrefunded portion of the prepaid rent and security deposit related to some survey,
architecture and construction design costs that were incurred by the landlord prior to the Company terminating the lease. In September
and October 2023, the landlord notified the Company that there were additional costs that exceeded the amount of the refund and the landlord
released the Company from paying any amounts in excess of the original expected refund. The landlord also released the Company from any
remaining obligations under the lease and amendments. The Company has recognized a loss on the termination of this lease of $ 85,756 and
$ 247,525 in the years ended December 31, 2023 and 2022, respectively.

 Total amortization expense for the right-of-use
asset recorded for the initial lease for the year ended December 31, 2022 was $ 61,709. There was
 no amortization expense recorded in 2023.

 In June 2021, the Company entered into an agreement
with a company controlled by the Company's Chairman and co-founder to lease office space for $2,000 per month for a period of one
year. In May 2022, the Company informed the landlord that it would terminate this lease, and the landlord confirmed that the lease terminated
effective September 1, 2022. Total expense recorded for this lease for the three and nine months ended September 30, 2022 was $ 4,000 and
$ 16,000, respectively.

On August 28, 2020, the Company entered into three-year consulting agreements with Pink Possum, and Highbridge Consultants, LLC ("Highbridge"),
an entity controlled by Mr. Adrian James, a co-founder of the Company, pursuant to which Messrs. Okonsky and James provide the Company
with services. In consideration for entering into the consulting agreements, the Company issued the two entities ten-year warrants to
purchase the Company's common stock at an exercise price of $0.90 per share. The number of shares of common stock issuable pursuant
to the warrants was based on the number of shares of the Company's common stock outstanding at the time of exercise and provided
that Pink Possum and Highbridge would receive 18.75% and 25%, respectively, of the Company's shares of common stock outstanding
at the time of exercise on a fully diluted basis. On March 26, 2021 and March 25, 2021, respectively, Pink Possum and Highbridge entered
into amendments to the consulting agreements agreeing to exchange the original warrants for new ten-year warrants to purchase 21,112 and
 27,778 shares, respectively, of common stock at an exercise price of $220.50. During the year ended December 31, 2021, the Company recognized
compensation expenses of $ 5.6 million and $ 7.4 million for the warrants issued to Pink Possum and Highbridge, respectively. On December
20, 2021, Highbridge exercised all of its warrants on a cashless basis and the Company issued 24,479 shares of common stock to Highbridge.

 In addition, pursuant to the consulting agreements,
upon the occurrence of a Fundamental Transaction (as defined below) for an aggregate gross sales price of $100.0 million or more, each
entity will receive a cash payment equal to 1% of such gross sales price. For the purposes of the consulting agreements, "Fundamental
Transaction" means any of the following: (i) a consolidation or merger involving the Company if the holders of the voting securities
of the Company that are outstanding immediately prior to the consummation of such consolidation or merger do not, immediately after the
consummation of such consolidation or merger, hold voting securities that collectively possess at least a majority of the voting power
of all the outstanding securities of the surviving entity of such consolidation or merger or such surviving entity's parent entity;
(ii) a transfer or issuance (in a single transaction or series of related transactions) by one or more of the Company and its stockholders
to one person or to any group of persons acting in concert, of shares of the Company's capital stock then collectively possessing
50% or more of the voting power of all then outstanding shares of the Company's capital stock (computed on an as-converted to common
stock basis); or (iii) any sale, license, lease, assignment or other disposition of all or substantially all of the assets of the Company.
Furthermore, commencing upon the completion of the Company's initial public offering of the shares of our common stock, if the Company's
market capitalization exceeds $300.0 million for a period of 21 consecutive trading days, each of the entities will receive an additional
cash payment equal to $15.0 million; provided that the Company will have the right, in its sole discretion, to make the foregoing $15.0
million payment by the issuance of shares of the Company's common stock. The foregoing amounts will be payable to the entities if
the above milestones occur any time prior to the ten-year anniversary of the original consulting agreements, or August 28, 2030.

 In December 2022, the Company entered into an
employment agreement with Mr. Okonsky whereby Mr. Okonsky became an employee on January 2, 2023 and the consulting agreement with Pink
Possum was terminated. However, the warrants to Pink Possum, and the provisions for a Fundamental Transaction and the market capitalization
thresholds and related payments owed to Pink Possum if these were to occur remain in effect subsequent to the employment agreement. Mr.
Okonsky informed the Company on January 27, 2024 that he would forfeit his salary and benefits effective February 1, 2024.

 In March 2024, the Company entered into a consulting agreement with
Mr. Okonsky and he is entitled to a monthly fee of $5,000 and payment of 1% of the gross proceeds from any merger, sale or change of control
transaction (as determined by the board of directors) entered by the Company for a period of up to 6 months following the termination
of the consulting agreement. This consulting agreement terminates any remaining provisions of the Pink Possum agreement noted above other
than the warrants remain outstanding.

 NOTE 9 – STOCKHOLDERS' EQUITY

 On June 14, 2023, the Company's stockholders approved an increase
in the Company's authorized shares of common stock from 100,000,000 to 250,000,000. In addition, the Company is authorized to issue
 5,000,000 shares of preferred stock with a par value of $ 0.00001. The specific rights of the preferred stock, when so designated, shall
be determined by the board of directors (see Note 14).

 Common stock

 On February 1, 2022, the Company sold 29,630 shares
of its common stock in a public offering at $ 675.00 per share. The Company received net proceeds of $ 18,089,184 after underwriter commissions
and expenses of $ 1,910,816. The underwriter was also issued a warrant to purchase 1,482 shares of the Company's common stock at
an exercise price of $ 843.75 per share that expires 5.0 years from the date of issuance.

On May 24, 2023, the Company sold 26,667 shares of its common stock in a public offering at $ 168.75 per share. The Company received net
proceeds of $ 3,998,685 after underwriter commissions and expenses of $ 501,300.

 On September 18, 2023, the Company sold 6,222
shares of its common stock in a public offering at $ 112.50 per share. The Company received net proceeds of $ 571,400 after
underwriter commissions and expenses of $ 128,600. The underwriter was also issued a warrant to purchase 1,245 shares of the
Company's common stock at an exercise price of $ 140.625 per share that expires 5.5 years from the date of issuance. The
underwriter agreement provided the underwriter with a right of first refusal for any additional securities third-parties offerings
within twelve months of this offering.

 As discussed in Note 6 above, on May 24, 2023,
the Company issued the May 2023 Notes and May 2023 Warrants, along with the warrants to the placement agent in August 2022 with the issuance
of the Convertible Notes. The Company received consent from the underwriter to issue such securities. In addition, the Company was required
to reserve 480,516 shares of common stock for future issuance of shares for the conversion of the May 2023 Notes and exercise of the May
2023 Warrants and 2,684 shares for the exercise of the placement agent warrants.

 November 2023 Common Units and Pre-Funded Warrant Units

 On November 17, 2023, the Company sold (i) 73,913
 common units ("Common Units"), each consisting of one share of the Company's common stock, a Series A warrant
to purchase one share of common stock at an initial exercise price of $24.75 per share or pursuant to an alternative cashless exercise
option (described below), which warrant will expire on the five-year anniversary of the original issuance date (the "Series A Warrants")
and a Series B warrant to purchase one share of common stock at an initial exercise price of $37.80 per share, which warrant will expire
on the five-year anniversary of the original issuance date (the "Series B Warrants" and together with the Series A Warrants,
the "Warrants"); and (ii) 878,469
 pre-funded units (the "Pre-funded Units" and together with the Common Units, the "Units"), each consisting
of one pre-funded warrant to purchase one share of common stock (the "Pre-funded Warrants"), a Series A Warrant and a Series
B Warrant. The purchase price of each Common Unit was $18.90, and the purchase price of each Pre-Funded Unit was $18.8996. The Pre-Funded
Warrants are immediately exercisable and may be exercised at any time until all of the Pre-Funded Warrants are exercised in full. As
of December 31, 2023, 804,618
 of the Pre-Funded Warrants were exercised and the remaining Pre-Funded Warrants were exercised by January 9, 2024.

 In addition, the Company
granted the underwriter a 45-day option to purchase additional 142,858 shares of common stock and/or Pre-Funded Warrants, representing
up to 15% of the number of common stock and Pre-Funded Warrants sold in the Public Offering, and/or additional 18,724 Series A Warrants
representing up to 15% of the Series A Warrants sold in the Public Offering, and/or additional 18,724 Series B Warrants representing
up to 15% of the Series B Warrants sold in the Public Offering solely to cover over-allotments, if any. The underwriter partially exercised
its over-allotment option with respect to 18,724 Series A Warrants and Series B Warrants. A total of 352,057
 each of Series A and B Warrants were issued in the transaction. The net proceeds were approximately $ 16.2
million (gross proceeds of $18.0 million less fees and expenses of $1.8 million). The gross proceeds and transaction cost were
allocated to each of the instruments issued in the offering at their estimated relative fair values. Transaction costs totaling $ 1,444,547
related to the Series A and Series B Warrants were expensed since these warrants were determined to be liabilities and recorded at their
estimated fair values (see Note 7).

 Series A Warrants

 Each Series A Warrant has an initial exercise
price per share equal to $ 24.75, was immediately exercisable upon issuance, and will expire on the five-year anniversary of the original
issuance date, or November 17, 2028.

 Share Combination Event Adjustments

 Conditioned upon the receipt of the Warrant Stockholder Approval at
a required special meeting of stockholders ("Special Meeting"), if at any time on or after the date of issuance there occurs
any share split, share dividend, share combination, recapitalization or other similar transaction involving the Company's common
stock (collectively a "Share Event") and the lowest daily VWAP during the five consecutive trading days prior to the date
of such event and the five consecutive trading days after the date of such event is less than the exercise price then in effect, then
the exercise price of the Series A Warrant shall be reduced to the lowest daily VWAP during such period and the number of warrant shares
issuable shall be increased such that the aggregate exercise price payable thereunder, after taking into account the decrease in the exercise
price, shall be equal to the aggregate exercise price on the date of issuance. As discussed in Note 14 below, approval of this adjustment
by the stockholders was made on January 12, 2024.

Cashless Exercise

 If at the time a holder exercises its Series A
Warrants, a registration statement registering the issuance of the shares of common stock underlying the Series A Warrants under the Securities
Act is not then effective or available and an exemption from registration under the Securities Act is not available for the issuance of
such shares, then in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment of the aggregate
exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common
stock determined according to a formula set forth in the Series A Warrants.

 Conditioned upon the receipt of the Warrant Stockholder
Approval at a required Special Meeting, a holder of Series A Warrants may also provide notice and elect an "alternative cashless
exercise" pursuant to which they would receive an aggregate number of shares equal to the product of (x) the aggregate number of
shares of common stock that would be issuable upon a cash exercise of the Series A Warrant and (y) 3.0. As discussed in Note 14 below,
approval of this adjustment by the stockholders was made on January 12, 2024.

 Adjustments and Activity Subsequent to December
31, 2023

 As discussed in Note 14, the Company completed a
1 for 45 reverse stock split on February 2, 2024. Prior to this reverse split, 18,941 Series A Warrants were exercised under the alternative
cashless exercise provision in the period from January 1, 2024 to February 2, 2024. As a result of the reverse stock split, the total
number of Series A Warrants and exercise price for the remaining warrants was adjusted per the provisions of a Share Event and the total
number of Series A Warrants became 3,979,955 and the exercise price became $1.8646. A total of 3,937,910 of the Series A Warrants were
exercised under the alternative cashless exercise provision and 42,045 remain outstanding as of March 27, 2024.

 Series B Warrants

 Each Series B Warrant offered has an initial exercise
price per share equal to $ 37.80, was immediately exercisable upon issuance, and will expire on the five-year anniversary of the original
issuance date, or November 17, 2028.

 Anti-Dilution Provisions

 Subject to certain exemptions outlined in the Series B Warrant, for
the life of the warrant, if the Company sells, enters into an agreement to sell, or grants any option to purchase, or sells, enters into
an agreement to sell, or grants any right to reprice, or otherwise disposes of or issue (or announce any offer, sale, grant or any option
to purchase or other disposition) any common stock or convertible security, at an effective price per share less than the exercise price
of the Series B Warrant then in effect (a "Dilutive Issuance"), the exercise price of the Series B Warrant will be reduced
to an amount equal to the lowest daily VWAP during the period commencing five consecutive trading days following the Dilutive Issuance,
subject to a floor price of $0.13; provided that upon the receipt of the Warrant Stockholder Approval at a required Special Meeting, the
floor price will be removed and, upon a Dilutive Issuance, the number of shares issuable upon exercise of the Series B Warrant shall be
proportionally adjusted so that the aggregate exercise price of the Series B Warrant shall remain unchanged. As discussed in Note 14 below,
approval of this adjustment by the stockholders was made on January 12, 2024.

 In addition, conditioned upon the receipt of the
Warrant Stockholder Approval at the Special Meeting, for the life of the Series B Warrant, the Company may voluntarily reduce the exercise
price of the Series B Warrant. The Company refers to this price adjustment feature as the "Voluntary Adjustment Provision".
As discussed in Note 14 below, approval of this adjustment by the stockholders was made on January 12, 2024.

 Share Combination Event Adjustments

 Conditioned upon the receipt of the Warrant Stockholder Approval, if
at any time on or after the date of issuance there occurs any share split, share dividend, share combination, recapitalization or other
similar transaction involving the Company's common stock (collectively a "Share Event") and the lowest daily VWAP during
the five consecutive trading days prior to the date of such event and the five consecutive trading days after the date of such event is
less than the exercise price then in effect, then the exercise price of the Series B Warrant shall be reduced to the lowest daily VWAP
during such period and the number of warrant shares issuable shall be increased such that the aggregate exercise price payable thereunder,
after taking into account the decrease in the exercise price, shall be equal to the aggregate exercise price on the date of issuance.
As discussed in Note 14 below, approval of this adjustment by the stockholders was made on January 12, 2024.

 Adjustments and Activity Subsequent to December 31, 2023

 As discussed in Note 14, the Company completed a 1 for 45 reverse stock
split on February 2, 2024. Prior to this reverse split, no Series B Warrants had been exercised. As a result of the reverse stock split,
the total number of Series B Warrants and exercise price for the remaining warrants was adjusted per the provisions of a Share Event and
the total number of Series B Warrants became 7,137,082 and the exercise price became $1.8646. A total of 70,000 of the Series B Warrants
were exercised and 7,067,062 remained outstanding as of March 4, 2024, when the Company exchanged the May 2023 Notes for Series A Convertible
Preferred Stock with a conversion price of $1.33 per share, as discussed further in Note 14. As a result of this exchange, the Series
B Warrant amounts and exercise price were further adjusted based on the Anti-Dilution Provisions and the new number of Series B Warrants
is 14,546,024 and the exercise price is $0.9059. As of March 27, 2024, 14,546,024 of the Series B Warrants remain outstanding.

 Other Warrants

 As discussed in Note 6, the Company issued the
Note Warrants, which were fully vested, to purchase 40,258 shares of the Company's common stock at an initial exercise price of
$ 641.25. The Note Warrants expire August 24, 2027. Also, the Company issued to the placement agent of the Convertible Notes, fully vested
warrants to purchase 2,684 shares of the Company's common stock at an exercise price of $ 801.5625. The warrants were not exercisable
until February 24, 2023 and expire on February 24, 2028. The Company valued all of these warrants
using the closing price of the Company's common stock on August 24, 2022 of $549.00, volatility of 79.81% based on peer companies,
risk free interest rate of 3.03%, no dividends and an estimated life of 2.5 years.

 In May 2023, all of the Note Warrants to purchase
 40,258 shares of the Company's common stock were exchanged for Exchange Warrants to purchase 75,814 shares of the Company's
common stock with an initial exercise price of $245.25 per share (which was adjusted to $168.75 per share upon stockholder approval which
was received on August 3, 2023). The Exchange Warrants expire August 24, 2027. Also in May 2023, in connection with the issuance of the
New Notes, the Company also issued New Warrants to purchase 24,157 shares of common stock at an initial exercise price of $245.25 (which
was adjusted to $168.75 per share upon stockholder approval which was received on August 3, 2023). As discussed above, the exercise price
of the Exchange Warrants and New Warrants were adjusted to $61.605 per share in October 2023 due to the 1 for 5 reverse stock split. Due
to the exchange of the May 2023 Notes for Series A convertible preferred stock as discussed further in Note 14 below, the exercise price
of the Exchange and New Warrants was adjusted to $1.33.

 As noted below, 6,824 of the Exchange Warrants
were exercised at a price of $78.75 per share and 6,824 Reload Warrants were issued with an exercise price of $ 112.50 per share. In October
2023, the Reload warrant exercise price was reduced to $61.605. The Reload warrants expire August 24, 2027. Due to the exchange of the
May 2023 Notes for Series A convertible preferred stock as discussed further in Note 14 below, the exercise price of the Reload Warrants
was adjusted to $1.33.

 On October 11, 2023, the Company entered into
an amendment (the "Amendment") to its Stag UTV development and Stag supplier agreements with GLV Ventures ("GLV").
Pursuant to the Amendment, GLV agreed to provide the Company with extended payment terms and provide the Company with credit against new
vehicles for the value of certain parts purchased by the Company. In consideration for entering into the Amendment No. 1, the Company
agreed to issue GLV (or its designee) five-year warrants to purchase 8,889 shares of Company common stock with an exercise price of $94.50
per share, which was equal to the closing price of the Company's common stock on the date of the Amendment No. 1, 4,445 shares were fully
vested upon issuance and the remaining warrants vested 45 days from the issuance date.

 Warrant Inducements

 On October 13, 2023, the
Company entered into an inducement offer letter agreement (the "Inducement Letter") with the three holders (each, a "Holder")
of the May 2023 Warrants. The Company agreed to reduce the exercise price of up to 21,623 to the lesser of (i) $78.75 (after giving effect
to the 1:5 reverse stock split that went into effect on October 13, 2023) and (ii) the exercise price in effect at the time of exercise
of the Existing Warrants if further adjusted in accordance with the terms of the May 2023 Warrants ($61.605 per share after adjustment
for the lowest day's VWAP for the five days following the reverse stock split). The reduction of the exercise price of such Existing
Warrants remained in effect until October 27, 2023 (the "Inducement Period"). The exercise price for any Warrants not exercised
prior to the end of the Inducement Period would not result in a change in the exercise price under the original terms of the Existing
Warrants. The Holders exercised 6,824 warrants of the 21,623 warrants available for exercise. Due to the exchange of the May 2023 Notes
for Series A convertible preferred stock as discussed further in Note 14 below, the exercise price of the warrants issued for those exercised
in the Inducement Period were adjusted to $1.33.

 In
addition, pursuant to the Inducement Letter, the Holders who exercise such Existing Warrants for cash on or prior to October 27, 2023
would receive a new warrant ("Reload Warrant") to purchase a number of shares of common stock equal to the number of shares
of common stock exercised under the Existing Warrants. The exercise price of the Reload Warrants was determined based on the terms of
the Existing Warrants, which was $61.605 per share. On October 20, 2023, the Holders exercised 2,332 warrants at $61.605 per share. Due
to the exchange of the May 2023 Notes for Series A convertible preferred stock as discussed further in Note 14 below, the exercise price
of the Reload Warrants was adjusted to $1.33.

 On October 29, 2023, in an effort to raise cash,
the Company entered into an inducement offer letter agreement (the "Inducement Reprice Letter") with the Holders of the Company's
May 2023 Warrants. Pursuant to the Inducement Reprice Letter, in exchange for an aggregate cash payment of $ 346,500, the Company reduced
the exercise price with respect to May 2023 Warrants exercisable into an aggregate of 7,778 shares of common stock from $61.605 per share
to $0.45 per share. On January 10, 2024, the Holders exercised these warrants.

 The following is the activity related to common stock warrants during
the year ended December 31, 2023:

 Schedule of warrants activity

 Common Stock Warrants

 Shares

 Weighted
 Average
 Exercise
 Price

 Weighted
 Average
 Remaining
 Life in years

 Intrinsic Value

 Outstanding at January 1, 2023

 67,060

 $
 524.97

 Granted (1)

 6,399,061

 $
 4.71

 Canceled

 –

 $
 –

 Exchanged

 ( 40,260
)

 $
 641.25

 Expired

 –

 $
 –

 Exercised

 ( 813,774
)

 $
 19.38

 Outstanding at December 31, 2023

 5,612,087

 $
 7.04

 4.87

 $

 Exercisable at December 31, 2023

 5,612,087

 $
 7.04

 4.87

 $

 (1)
 The number of warrants granted and the weighted average exercise price is based on the adjustment to certain warrants as of February
2, 2024, the date of the Company's 1 for 45 reverse stock split. As discussed above, further adjustments occurred based on the change
in the change in the VWAP of the Company's common stock from February 2, 2024 and due to the exchange of the May 2023 Notes for
Series A convertible preferred stock on March 4, 2024.

 During the years ended December 31, 2023 and 2022, the Company recognized
expense of $ 412,000 and $ 7,302, respectively, related to common stock warrants.

 NOTE 10 – STOCK-BASED COMPENSATION

 In January 2021, the Company's board of
directors adopted the Volcon, Inc. 2021 Stock Plan, (the "2021 Plan"). The 2021 Plan is a stock-based compensation plan that
provides for discretionary grants of stock options, stock awards, and restricted stock unit awards to employees, members of the board
of directors and consultants (including restricted stock units issued prior to the adoption of the plan as further discussed below). The
Company initially reserved a total of 13,334 shares of the Company's common stock for issuance under the 2021 Plan. On July 26,
2022, the Company's stockholders approved an increase of 17,778 shares of the Company's common stock for issuance under the
2021 plan, which may be adjusted for changes in capitalization and certain corporate transactions. To the extent that an award, if forfeitable,
expires, terminates or lapses, or an award is otherwise settled in cash without the delivery of shares of common stock to the participant,
then any unpaid shares subject to the award will be available for future grant or issuance under the 2021 Plan. Shares available for issuance
under the 2021 Plan as of December 31, 2023, wer e 8,752 s hares.
Awards vest according to each agreement and as long as the employee remains employed with the Company or the consultant continues to provide
services in accordance with the terms of the agreement.

 Restricted Stock Units

 The following is the restricted stock unit activity
for the year ended December 31, 2023

 Schedule of restricted stock unit activity

 Outstanding January 1, 2023

 Granted

 –

 Vested (1)

 ( 204
)

 Canceled

 ( 132
)

 Outstanding December 31, 2023

 –

 (1)

 112 RSUs were subject to cancellation due to termination of employment. However, the Company entered into a modification to allow the employee to fully vest in these RSUs as part of a severance agreement. The Company recorded additional expense of $31,487 during the year ended December 31, 2023 related to this modification.

 In January 2022, the Company modified the vesting terms of 445 RSUs
that had vested as of December 31, 2021 to extend the vesting through May 15, 2022. The Company granted an additional 112 RSUs to the
holders of these RSUs that vesting was extended and these additional RSUs vested as of May 15, 2022. The Company recorded an additional
expense of $1,126,250 during 2022 related to these modifications.

 For the years ended December 31, 2023 and 2022, the Company recognized
expenses for RSUs of $ 61,623 and $ 1,267,550, respectively.

 Performance Shares

 On March 1, 2022, the Compensation Committee of
the board of directors approved a grant of 199 shares for the achievement of some of the Company's 2021 performance milestones,
and the Company recognized share-based compensation expenses of $ 82,050 related to the grant of these shares in the quarter ended March
31, 2022. Certain individuals whose employment terminated subsequent to December 31, 2021 forfeited their share grants totaling 14 shares
and such shares are available for future issuance under the 2021 Plan.

 In 2022 the compensation committee approved reserving
 1,112 shares from the 2021 Plan to issue based on achievement of the Company's 2022 performance milestones to employees who are
employed in 2022 and are active employees on the date of approval in 2023 by the compensation committee. On February 6, 2023 the compensation
committee of the board of directors approved a grant of 689 shares ( 618 were issued due a forfeiture of 3 shares and 68 shares withheld
for payment of employee withholding taxes) for the achievement of some of the Company's 2022 performance milestones. The Company
recognized share-based compensation expenses of $ 257,717 related to the grant of these shares in the quarter ended March 31, 2023. The
compensation committee also approved reserving the remaining 423 not issued for 2022 performance milestones for issuance to active employees
on the date the first Stag is shipped to a customer.

 In addition, the compensation committee also approved
reserving 1,112 shares from the 2021 Plan to issue to employees based on achievement of the Company's 2023 performance milestones
to employees who are employed in 2023 and are active employees on the date of approval in 2024 by the compensation committee. No shares
were approved for grant by the compensation committee for 2023 performance milestones.

 Stock Options

 The following is the common stock
options to employees and consultants for services during the year ended December 31, 2023:

 Schedule of stock
options activity

 Common Stock Options

 Shares

 Weighted
 Average
 Exercise
 Price

 Weighted
 average
 Remaining
 Life in years

 Intrinsic Value

 Outstanding at January 1, 2023

 14,694

 $
 694.31

 Granted

 11,256

 $
 169.08

 Forfeited

 ( 6,772
)

 $
 635.63

 Exercised

 ( 112
)

 $
 225.00

 Outstanding at December 31, 2023

 19,066

 $
 407.97

 8.72

 $
 –

 Exercisable at December 31, 2023

 8,263

 $
 594.62

 8.13

 $
 –

 The Company valued the options
using the closing stock price of the Company's common stock on the date of grant and the following assumptions:

 Schedule of assumptions

 2023

 2022

 Volatility (based on peer companies)

 79 % - 83 %

 71 % - 105 %

 Risk free interest rate

 3.54 % - 4.77 %

 0.77 % - 0.85 %

 Dividends

 None

 None

 Estimated life in years

 During the years ended December 31, 2023 and 2022, the Company recognized
share-based compensation expenses of $ 1,896,585, and $ 1,966,958, respectively, related to common stock options. The Company expects to
recognize additional compensation expense of $ 661,734 related to these common stock options assuming all awards will vest.

 Total stock-based compensation recorded for the years ended December
31, 2023 and 2022 for all stock based compensation awards, including warrants, has been recorded as follows:

 Schedule of stock-based compensation expense

 2023

 2022

 Cost of Goods Sold

 $
 211,981

 $
 578,552

 Sales and Marketing

 693,559

 764,517

 Product Development

 837,271

 704,152

 General and Administrative

 885,114

 1,211,788

 Total

 $
 2,627,925

 $
 3,259,009

 NOTE 11 – LOSS PER COMMON SHARE

 The basic net loss per common share is calculated by dividing the Company's
net loss available to common stockholders by the weighted average number of common shares during the year. The diluted net loss per common
share is calculated by dividing the Company's net loss available to common stockholders by the diluted weighted average number of common
shares outstanding during the year. The diluted weighted average number of common shares outstanding is the basic weighted number of common
shares adjusted for any potentially dilutive debt or equity.

 Schedule of loss per common share

 Year ended

 Year ended

 December 31, 2022

 Numerator:

 $
 ( 45,071,210
)

 $
)

 Denominator:

 Denominator for basic and diluted net loss per common share - weighted average of common shares

 192,312

 105,275

 Basic and diluted net loss per common share

 $
 ( 234.37
)

 $
 ( 325.20
)

 Common shares consisting of shares
potentially dilutive as of December 31, 2023 and 2022 are as follows:

 Schedule of common shares consisting of shares
potentially dilutive

 2023

 2022

 Convertible Notes

 521,206

 53,677

 Warrants

 5,612,087

 67,060

 Stock options

 19,066

 14,694

 Restricted stock units

 –

 Total

 6,152,359

 135,767

 NOTE 12 – INCOME TAXES

 Deferred taxes are determined by applying the provisions of enacted
tax laws and rates for the jurisdictions in which the Company operates to the estimated future tax effects of the differences between
the tax basis of assets and liabilities and their reported amounts in the Company's financial statements. A valuation allowance is established
to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.

 Due to losses since inception and for all periods presented, no income
tax benefit or expense has been recognized as a full valuation allowance has been established for any tax benefit that would have been
recognized for the loss in any period presented.

 The components of income tax expense (benefit) for the years ended
December 31, 2023 and 2022 are as follows:

 Schedule of components of income tax expense (benefit)

 2023

 2022

 Expected federal income tax benefit at statutory rate

 $
 9,464,954

 $
 7,184,840

 Non-deductible expenses

 1,183,767

 ( 288,249
)

 Research and development credit

 –

 595,244

 Return to provision true up

 108,959

 93,285

 Change in valuation allowance

 ( 10,757,680
)

 ( 7,585,120
)

 Income tax benefit

 $
 –

 $
 –

 Significant components of the Company's deferred
tax assets and liabilities at December 31, 2023 and 2022 are as follows:

 Schedule of deferred
tax assets and liabilities

 2023

 2022

 Deferred tax assets

 Net operating losses

 $
 15,468,757

 $
 9,106,430

 Debt basis difference

 5,121,397

 –

 Depreciation and amortization

 1,701,768

 1,502,868

 Research & development credit

 1,099,535

 1,308,956

 Lease liability

 246,704

 322,167

 Stock-based compensation

 3,235,732

 3,103,037

 Inventory

 152,749

 1,290,968

 Accrued expenses

 66,909

 233,284

 Capital loss carryover

 176,950

 261,922

 Dealer rebates

 459,713

 161,469

 Other

 21,828

 15,605

 Total

 27,752,042

 17,306,705

 Valuation allowance

 ( 27,171,016
)

 ( 16,661,612
)

 Net deferred tax asset

 581,026

 645,093

 Deferred tax liabilities

 Prepaid expenses

 ( 342,421
)

 ( 328,836
)

 Right-of-use assets

 ( 238,605
)

 ( 316,257
)

 Total net deferred taxes Deferred tax liabilities

 $
 –

 $
 –

 Management currently believes that since the Company has a history
of losses it is more likely than not that the deferred tax regarding the loss carry forwards and other temporary differences will not
be realized in the foreseeable future. The utilization of the Company's net operating losses and credit carryovers may be subject
to limitation due to the "change in ownership provisions" under Section 382 of the Internal Revenue Code. The Company's cumulative
net operating loss carry forward of $ 73.7 million as of December 31, 2023, may be limited in future years depending on future taxable
income in any given fiscal year. The net operating losses can be carried forward indefinitely.

 The Company has recorded no liability for income taxes associated
with unrecognized tax benefits and has not recorded any liability associated with unrecognized tax benefits. Accordingly, the Company
has not recorded any interest or penalty in regard to any unrecognized benefit.

 NOTE 13 – LEASES

 The components of lease cost
for operating leases for the years ended December 31, 2023 and 2022 are as follows:

 Schedule of lease cost
for operating leases

 2023

 2022

 Lease Cost

 Operating lease cost

 $
 468,997

 $
 524,036

 Short-term lease cost

 215,289

 263,277

 Variable lease cost

 –

 –

 Sublease income

 –

 –

 Total lease cost

 $
 684,286

 $
 787,313

 Supplemental cash flow information related to leases for the years
ended December 31, 2023 and 2022 are as follows:

 Schedule of supplemental cash flow information related to leases

 2023

 2022

 Other Lease Information

 Cash paid for amounts included in the measurement of lease liabilities:

 Operating cash flows from operating leases

 $
 359,347

 $
 354,340

 Amortization of right-of-use assets

 $
 369,774

 $
 430,644

 The following table summarizes the lease-related assets and liabilities
recorded on the balance sheet at December 31, 2022 and 2021:

 Schedule of lease-related assets and liabilities

 2023

 2022

 Lease Position

 Operating Leases

 Operating lease right-of-use assets

 $
 1,136,213

 $
 1,505,987

 Right-of-use liability operating lease - short- term

 399,611

 391,117

 Right-of-use liability operating lease - long-term

 775,170

 1,143,011

 Total operating lease liabilities

 $
 1,174,781

 $
 1,534,128

 The Company utilizes the incremental borrowing rate in determining
the present value of lease payments unless the implicit rate is readily determinable. The Company did not recognize any initial right-of-use
asset and lease liabilities during the year ended December 31, 2022.

 Schedule of right-of-use
asset and lease liabilities

 Lease Term and Discount Rate

 Weighted-average remaining lease term (years)

 Operating leases

 2.7

 Weighted-average discount rate

 Operating leases

 6.82 %

 The following table provides the maturities of
lease liabilities at Dece mber 31, 2023:

 Schedule of maturities of
lease liabilities

 Operating

 Leases

 2024

 $
 471,638

 2025

 485,702

 2026

 340,591

 Total future undiscounted lease payments

 1,297,931

 Less: Interest

 ( 123,148
)

 Present value of lease liabilities

 $
 1,174,783

 The Company closed its Denver, Colorado, store location (the Company's
only store) in June 2022 and entered into a lease termination agreement in July 2022 to relieve the Company of its future obligations
under the lease. The Company has recorded a loss of $ 148,322 in the year ended December 31, 2022 related to this facility which includes
the write-off of prepaid rent, security deposit, right-of-use asset and liability and a loss on the write-off of leasehold improvements
and fixtures and furniture of $ 46,289.

 In July 2022, the Company entered into a new lease agreement for office
space in Round Rock, Texas with the landlord of its current Round Rock facilities. The lease began in August 2022 and terminates in August
2026. In connection with signing this lease, the landlord has agreed to terminate the lease on one of the current facilities that would
have expired in December 2023. The additional monthly rent after consideration of the rent on the facility being canceled is not significant.
As discussed in Note 7 above, the Company terminated the lease, and related amendment, as of September 30, 2022 for a leased warehouse
facility in conjunction with entering into the lease agreement for office space and the above does not include any amounts related to
that lease. There was an insignificant impact to the Company's operations for the year ended December 31, 2022 due to the termination
of this lease.

 The total loss on lease terminations for the years ended December 31,
2023 and 2022 was $ 85,756 and $ 378,176, respectively.

 NOTE 14 - SUBSEQUENT EVENTS

 Special
Stockholder Meeting

 On
January 12, 2024, the Company held a special stockholder meeting and the following proposals were approved by stockholders:

 A proposal to allow the board of directors of
the Company to complete a reverse stock split between 1 for 2 shares outstanding, up to 1 for 45 shares outstanding.

 A proposal to approve adjustments to certain terms
of the Series A and Series B warrants (as more fully described in Note 9) issued in the November 2023 Offering as follows:

 Series A Warrants

 Approval of the share combination adjustment provision

 Approval of the alternative cashless exercise provision

 Series B Warrants

 Approval of the anti-dilution adjustment provision

 Approval of the voluntary adjustment provision

 Approval of the share combination adjustment provision

 Reverse Stock Split

 On January 27, 2024, the board of directors approved
a reverse 1 for 45 stock split effective at 4:01pm U.S. Eastern Standard Time. Any fractional shares as a result of the reverse stock
split were rounded up to one full share of common stock. As discussed in Note 6, the conversion price of the May 2023 Notes and exercise
price of the May 2023 Warrants were subject to adjustment to the lowest day's VWAP in the five-day period following the reverse
split, which was $1.8646 per share. As discussed below, some of the May 2023 Notes were converted subsequent to December 31, 2023 and
the remainder were exchanged for Series A convertible Preferred Stock.

 As discussed in Note 9, the November 2023 Warrants
were subject to adjustment to the lowest day's VWAP in the five days prior to and five days following the reverse split. The lowest
VWAP during this period was $1.8646.

 Employment Matters

 On
January 13, 2024, the Company's Chief Executive Officer ("CEO"), Jordan Davis, resigned his employment with the Company
effective February 2, 2024. The Company entered into a 30-day consulting agreement with Mr. Davis and paid him $12,500.

 On January 27, 2024, the Company's founder,
Chief Technology Officer ("CTO") and Chairman of the Board of Directors, Christian Okonsky, resigned as CTO effective February
1, 2024. Mr. Okonsky will remain as Chairman of the Board of Directors. He also entered into a consulting agreement as further discussed
in Note 8, and to be paid a monthly fee of $5,000.

 On
January 30, 2024, John Kim, an independent board member of the Company signed an employment agreement with the Company to become the CEO
effective February 3, 2024. Mr. Kim's salary will be $800,000 and he will have an annual bonus of $250,000. Mr. Kim will also receive
5% of the gross proceeds or other consideration if the Company completes a sale of substantially all of its assets or otherwise enters
into a change of control transaction. Mr. Kim is also entitled to an equity award equal to 10% of the Company's fully diluted equity,
subject to stockholder approval of an increase in the shares available under the 2021 Plan or a new equity plan.

 On January 30, 2024, Greg Endo, the Company's Chief Financial
Officer, signed a new employment agreement with the Company. Mr. Endo's salary will be increased to $300,000 and he will have an
annual bonus of up to 50% of his salary as determined by the compensation committee of the board of directors. Mr. Endo has agreed to
a reduction in the salary to $238,500 through the end of 2024. Mr. Endo will also receive 5% of the gross proceeds or other consideration
if the Company completes a sale of substantially all of its assets or otherwise enters into a change of control transaction. Mr. Endo
is also entitled to an equity award equal to 4% of the Company's fully diluted equity, subject to stockholder approval of an increase
in the shares available under the 2021 Plan or a new equity plan.

 On February 23, 2024, Katherine Hale resigned her position as Chief
Marketing Officer. Ms. Hale was provided a severance amount of $112,500 which will be paid out over three monthly installments beginning
in March 2024.

 Conversion
and Exchange of May 2023 Notes for Preferred Stock

 Subsequent to December 31, 2023 through March 1, 2024, holders of the
May 2023 Notes converted principal of $7,414,025 to common stock at a conversion price of $1.8646. On March 4, 2024, the Company designated
25,000 shares of preferred stock as Series A Convertible Preferred Stock ("Preferred Stock") with a par value of $0.00001
per share and exchanged the remaining May 2023 Notes (principal of $24,694,670) for Preferred Stock. For each $1,000 of May 2023 Note
principal, one share of Preferred Stock was issued and any principal held by an investor below $1,000 was granted one additional share
of Preferred Stock. A total of 24,698 shares were issued in connection with the exchange. The Preferred Stock is initially convertible
into share of the Company's common stock at $1.33 per share. Conversion of Preferred Stock to common stock of the Company by the
holders of the Preferred Stock is limited based on ownership restrictions of either 4.99% or 9.99%. The conversion price is subject to
adjustment for anti-dilution provisions with an initial floor of $0.98 per share, subject to adjustment to $0.50 per share if shareholder
approval is received. The Company will include a proposal for shareholders to approve this adjustment in its 2024 annual meeting proposals.
Such meeting is expected to be held on May 17, 2024.

 As discussed further in Note 9, as a result of this exchange, the Series
B Warrants exercise price was adjusted to the lowest VWAP in the five-day period following this exchange which resulted in the exercise
price of $0.9059 and additional Series B warrants being issued.

 Through March 27, 2024, certain Preferred Stockholders converted $2,287,600
of their shares for 1,720,000 shares of common stock. The total number of shares of common stock issuable for the conversion of the remaining
Preferred Stock is 16,847,424 based on the $1.33 conversion price.

 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE

 None.

 ITEM 9A. CONTROLS AND PROCEDURES

 Evaluation of Disclosure Controls and Procedures

 Our disclosure controls and procedures (as defined
in Rules 13a-15(e) and 15d-15(e)) are designed to ensure that information required to be disclosed by us in reports we file or submit
under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the appropriate time periods,
and that such information is accumulated and communicated to the Chief Executive Officer, who is our principal executive officer, and
Chief Financial Officer, who is our principal financial officer, as appropriate, to allow timely discussions regarding required disclosure.
We, under the supervision of and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer,
have evaluated the effectiveness of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that the design and operation of our disclosure controls and procedures were ineffective as of December
31, 2023.

 Management's Report on Internal Control
over Financial Reporting

 Management is responsible for establishing and
maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United
States. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions or because the degree of compliance with policies or procedures may deteriorate.

 Management has determined that internal controls
over financial reporting are ineffective as the material weaknesses identified by our independent registered public accounting firm in
our internal control over financial reporting in our 2020 audit have not been remediated as of December 31, 2023. These material weaknesses
are as follows:

 Inadequate segregation of duties within account processes due to limited personnel

 Insufficient formal written policies and procedures for accounting, IT, financial reporting and record keeping

 This Annual Report on Form 10-K does not include
an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for an "emerging
growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities Act, as modified by the
Jumpstart Our Business Startups Act of 2012

 Changes in Internal Control Over Financial Reporting

 There were no changes to our internal control over
financial reporting during the three months ended December 31, 2023, that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.

 ITEM 9B. OTHER INFORMATION

 During the three months ended December 31, 2023,
no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1
trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS

 Not applicable.

 ITEM 10. DIRECTORS, EXECUTIVE
OFFICERS AND CORPORATE GOVERNANCE

 Information as to Item 10 is incorporated by reference
from the information in our definitive proxy statement for the 2024 Annual Meeting of Stockholders, which we will file pursuant
to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, 2023.

 ITEM 11. EXECUTIVE COMPENSATION

 Information as to Item 11 is incorporated by reference
from the information in our definitive proxy statement for the 2024 Annual Meeting of Stockholders, which we will file pursuant
to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, 2023.

 ITEM 12. SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 Information as to Item 12 is incorporated by reference
from the information in our definitive proxy statement for the 2024 Annual Meeting of Stockholders, which we will file pursuant
to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, 2023.

 ITEM 13. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

 Information as to Item 13 is incorporated by reference
from the information in our definitive proxy statement for the 2024 Annual Meeting of Stockholders, which we will file pursuant
to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, 2023.

 ITEM 14. PRINCIPAL ACCOUNTANT
FEES AND SERVICES

 Information as to Item 14 is incorporated by reference
from the information in our definitive proxy statement for the 2024 Annual Meeting of Stockholders, which we will file pursuant
to Regulation 14A with the SEC within 120 days after the close of the year ended December 31, 2023.

 ITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

 (1) Financial Statements

 The consolidated financial statements of Volcon,
Inc. and the Report of Independent Registered Public Accounting Firm are included in Part II, "Item 8.— Financial Statements
and Supplementary Data" of this Annual Report. Reference is made to the accompanying Index to Financial Statements.

 (2) Financial Statement Schedules

 All financial statement schedules have been omitted,
since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because
the information required is included in the consolidated financial statements and notes thereto.

 (3) Index to Exhibits

 The information required by this Item 15(a)(3)
is set forth on the exhibit index, which immediately precedes the signature page to this report and is incorporated herein by reference.

 ITEM 16. FORM 10-K SUMMARY

 We have elected not to provide summary information.

 INDEX TO EXHIBITS

 Exhibit

 Number

 Description

 3.1

 Amended and Restated
 Certificate of Incorporation of Volcon, Inc. (incorporated by reference to exhibit 3.1 of the Form 8-K filed October 8, 2021)

 3.2

 Certificate of Amendment
 to the Amended and Restated Certificate of Incorporation of Volcon, Inc. (incorporated by reference to exhibit 3.1 of the Form 8-K
 filed June 15, 2023)

 3.3

 Certificate of Amendment
 to the Amended and Restated Certificate of Incorporation of Volcon, Inc. (incorporated by reference to exhibit 3.1 of the Form 8-K
 filed October 16, 2023)

 3.4

 Certificate
 of Amendment to the Amended and Restated Certificate of Incorporation of Volcon, Inc. (incorporated by reference to exhibit 3.1 of
 the Form 8-K filed February 5, 2024)

 3.5

 Form
 of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of Volcon, Inc.
 (incorporated by reference to exhibit 3.1 of the Form 8-K filed March 4, 2024)

 3.6

 Form of Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock of Volcon, Inc. (incorporated by reference to exhibit 3.1 of
the Form 8-K filed March 25, 2024)

 3.7

 Amended and Restated
 Bylaws of Volcon, Inc. (incorporated by reference to exhibit 3.2 of the Form S-1 file number 333-259468)

 4.1

 Form of common
 stock (incorporated by reference to exhibit 4.1 of the Form S-1 file number 333-259468)

 4.2

 Form of Warrant issued
 to Pink Possum, LLC and Highbridge Consulting, LLC (incorporated by reference to exhibit 4.2 of the Form S-1 file number
 333-259468)

 4.3

 Form of Underwriter
 Warrant (incorporated by reference to exhibit 4.3 of the Form S-1 file number 333-262343)

 4.4

 Form of Underwriter
 Warrant issued in IPO (incorporated by reference to Exhibit 4.3 of the Form S-1 file number 333-259468)

 4.5

 Form of Senior Convertible
 Note (incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the SEC on August 24, 2022)

 4.6

 Note Amendment to Senior
 Convertible Note, dated September 6, 2022 (incorporated by reference to Exhibit 4.6 of the Form S-1 file number 333-267404)

 4.7

 Form of Common Stock
 Purchase Warrant (incorporated by reference to Exhibit 10.4 of the Form 8-K filed with the SEC on August 24, 2022)

 4.8

 Placement Agent Warrant
 (incorporated by reference to Exhibit 10.6 of the Form 8-K filed with the SEC on August 24, 2022)

 4.9

 Form of Exchange Convertible
 Note issued in May 2023 (incorporated by reference to Exhibit 4.3 of the Form 8-K filed with the SEC on May 22, 2023)

 4.10

 Form of New Note issued
 in May 2023 (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the SEC on May 22, 2023)

 4.11

 Form of New Warrants
 issued in May 2023 (incorporated by reference to Exhibit 4.2 of the Form 8-K filed with the SEC on May 22, 2023)

 4.12

 Form of Exchange Warrants
 issued in May 2023 (incorporated by reference to Exhibit 4.4 of the Form 8-K filed with the SEC on May 22, 2023)

 4.13

 Form of Underwriter Warrant dated September 15, 2023, with Aegis Capital Corp. (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the
 SEC on September 18, 2023)

 4.14

 Form of New Warrants
 issued in September 2023 warrant inducement (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the SEC on October
 2, 2023)

 4.15

 Form of Warrant issued to GLV Ventures (incorporated
 by reference to Exhibit 4.1 of the Form 8-K filed with the SEC on October 16, 2023)

 4.16

 Form of Pre-Funded Warrant
 issued in November 2023 (incorporated by reference to exhibit 4.1 of Form 8-K filed on November 20, 2023)

 4.17

 Form of Series A Warrant
 issued in November 2023 (incorporated by reference to exhibit 4.2 of Form 8-K filed on November 20, 2023)

 4.18

 Form of Series B Warrant
 issued in November 2023 (incorporated by reference to exhibit 4.3 of Form 8-K filed on November 20, 2023)

 4.19

 Form of Amended and
 Restated Convertible Note issued in November 2023 (incorporated by reference to exhibit 4.4 of Form 8-K filed on November 20, 2023)

 4.20

 Form of Amended and
 Restated Warrant issued in November 2023 (incorporated by reference to exhibit 4.5 of Form 8-K filed on November 20, 2023)

 4.21*

 Description of Registrant's Securities

 10.1

 2021 Stock Plan of Volcon,
 Inc., as amended (incorporated by reference to exhibit 10.1 of the Form S-1 file number 333-259468)

 10.2

 Consulting Agreement,
 as amended, between Volcon, Inc. and Pink Possum, LLC (incorporated by reference to exhibit 10.2 of the Form S-1 file number 333-259468)

 10.3

 Consulting Agreement,
 as amended, between Volcon, Inc. and Highbridge Consulting, LLC (incorporated by reference to exhibit 10.3 of the Form S-1 file
 number 333-259468)

 10.4

 Lease Agreement dated
 November 20, 2020, as amended between Volcon, Inc. and Alexander EV Park, LLC (incorporated by reference to exhibit 10.4 of the Form
 S-1 file number 333-259468)

 10.5

 Employment Agreement
 between Volcon, Inc. and Greg Endo dated January 30, 2024 (incorporated by reference to exhibit 10.2 of the Form 8-K filed February
 5, 2024)

 10.6

 Sublease Agreement dated
 June 1, 2021 between Volcon, Inc. and Sustainability Initiatives, LLC (incorporated by reference to exhibit 10.6 of the Form
 S-1 file number 333-259468)

 10.7

 Employment Agreement
 between Volcon, Inc. and Jordan Davis dated August 5, 2021 (incorporated by reference to exhibit 10.8 of the Form S-1 file number
 333-259468)

 10.8

 Securities Purchase
 Agreement by and among the Company and the Buyers of Convertible Notes, dated August 22, 2022 (incorporated by reference to Exhibit
 10.1 of the Form 8-K filed with the SEC on August 24, 2022)

 10.9

 Registration Rights
 Agreement by and among the Company and the Buyers of Convertible Notes, dated August 22, 2022 (incorporated by reference to Exhibit
 10.2 of the Form 8-K filed with the SEC on August 24, 2022)

 10.10

 Placement Agent Agreement
 for Convertible Notes (incorporated by reference to exhibit 10.5 of the Form 8-K filed August 24, 2022)

 10.11

 Amendment to the Volcon,
 Inc. 2021 Stock Plan (as amended and restated) (incorporated by reference to exhibit 10.1 of the Form 8-K filed July 27, 2022)

 10.12

 Supply Agreement with
 General Motors LLC executed as of August 9, 2022 and effective as of August 3, 2022 (incorporated by reference to exhibit 10.2 of
 the Form 10-Q filed August 15, 2022)

 10.13

 Supplier Agreement with
 GLV Ventures effective August 11, 2022 (incorporated by reference to exhibit 10.3 of the Form 10-Q filed August 15, 2022)

 10.14

 Employment Agreement
 between Volcon, Inc. and Stephanie Davis, dated January 3, 2022 (incorporated by reference to exhibit 10.2 of the Form 10-Q filed
 May 12, 2022)

 10.15

 Underwriting Agreement
 by and among Volcon, Inc. and Aegis Capital Corp., dated January 28, 2022 (incorporated by reference to exhibit 1.1 of Form 8-K filed
 on April 28, 2022)

 10.16

 Securities Purchase
 Agreement by and among the Company and the Buyers, dated May 19, 2023 (incorporated by reference to Exhibit 10.1 of the Form 8-K
 filed with the SEC on May 25, 2023)

 10.17

 Registration Rights
 Agreement by and among the Company and the Buyers, dated May 19, 2023 (incorporated by reference to Exhibit 10.2 of the Form 8-K
 filed with the SEC on May 22, 2023)

 10.18

 Placement Agent Agreement
 by and among the Company and Aegis Capital Corp. (incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the SEC on
 May 22, 2023)

 10.19

 Underwriting Agreement
 by and among Volcon, Inc. and Aegis Capital Corp., dated May 22, 2022 (incorporated by reference to exhibit 1.1 of Form 8-K filed
 on May 25, 2023)

 10.20

 Amendment No. 2 to the
 Volcon, Inc. 2021 Stock Plan (as amended and restated) (incorporated by reference to exhibit 10.1 of the Form 8-K filed July 14,
 2023)

 10.21

 Form of Indemnification
 Agreement with the Company's directors and executive officers (incorporated by reference to Exhibit 10.1 of the Form 8-K filed
 with the SEC on September 12, 2023)

 10.22

 Waiver and Modification
 Agreement dated September 14, 2023 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the SEC on September 15,
 2023)

 10.23

 Note Amendment dated
 September 14, 2023 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the SEC on September 15, 2023)

 10.24

 Underwriting Agreement
 by and among Volcon, Inc. and Aegis Capital Corp., dated September 15, 2023 (incorporated by reference to exhibit 1.1 of Form 8-K
 filed on November 20, 2023)

 10.25

 Security Agreement between
 the Company, the Volcon Subsidiaries and Empery Tax Efficient, LP, in its capacity as collateral agent, dated September 22, 2023
 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the SEC on September 27, 2023)

 10.26

 Guaranty Agreement between
 the Company, the Volcon Subsidiaries and Empery Tax Efficient, LP, in its capacity as collateral agent, dated September 22, 2023
 (incorporated by reference to Exhibit 10.3 of the Form 8-K filed with the SEC on September 27, 2023)

 10.27

 Form of Warrant Inducement
 Agreement dated September 29, 2023 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the SEC on October 2, 2023)

 10.28+

 Cooperative Research
 and Development Agreement with the United States Army Engineer Research and Development Center Construction Engineering Research
 Laboratory dated October 4, 2023 (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the SEC on October 10, 2023)

 10.30

 First Amendment dated
 October 11, 2023 to Volcon Stag Supplier Agreement (incorporated by reference to Exhibit 10.1 of the Form 8-K filed with the SEC
 on October 16, 2023)

 10.31

 Form of Warrant Inducement
 Agreement October 13, 2023 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the SEC on October 16, 2023)

 10.32

 Form of Warrant Inducement
 Agreement October 30, 2023 (incorporated by reference to Exhibit 10.2 of the Form 8-K filed with the SEC on October 30, 2023)

 10.33

 Underwriting Agreement
 by and among Volcon, Inc. and Aegis Capital Corp., dated November 16, 2023 (incorporated by reference to exhibit 1.1 of Form 8-K
 filed on November 20, 2023)

 10.34

 Form of Note and Warrant
 Amendment Agreement (incorporated by reference to exhibit 10.1 of Form 8-K filed on November 20, 2023)

 10.35

 Employment Agreement
 between Volcon, Inc. and John Kim dated January 30, 2024 (incorporated by reference to exhibit 10.2 of the Form 8-K filed February
 5, 2024)

 10.36

 Consulting Agreement
 between Volcon, Inc. and Jordan Davis dated February 1, 2024 (incorporated by reference to exhibit 10.3 of the Form 8-K filed February
 5, 2024)

 10.37

 Form of Note Exchange
 Agreement dated March 3, 2024 (incorporated by reference to exhibit 10.1 of Form 8-K filed on March 4, 2024)

 21.1

 List of subsidiaries
 (incorporated by reference to exhibit 21.1 of the Form S-1 file number 333-259468)

 23.1*

 Consent of MaloneBailey LLP

 31.1*

 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.

 31.2*

 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934.

 32.1*(1)

 Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 32.2*(1)

 Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 97*

 Dodd-Frank Restatement Recoupment Policy

 101.INS

 101.SCH

 Schema Document

 101.CAL

 Calculation Linkbase Document

 101.DEF

 Definition Linkbase Document

 101.LAB

 Label Linkbase Document

 101.PRE

 Presentation Linkbase Document

 and included in exhibit 101).

 *

 Filed herewith.

 +

 Pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated by the SEC, certain portions of this exhibit have been redacted. The Company hereby agrees to furnish supplementally to the SEC, upon its request, an unredacted copy of this exhibit.

 Indicates management contract or compensatory plan, contract or arrangement.

 (1)

 The certifications on Exhibit 32 hereto are deemed not "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

 SIGNATURES

 Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 SIGNATURE

 TITLE

 DATE

 /s/ John Kim

 Chief Executive Officer and Director

 March
 28, 2024

 John Kim

 (principal executive officer)

 /s/ Greg Endo

 Chief Financial Officer

 March
 28, 2024

 Greg Endo

 (principal financial and accounting officer)

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on March 28, 2024.

 Signature

 Title

 /s/ John Kim

 Chief Executive Officer

 John Kim

 (Principal Executive Officer)

 Director

 /s/ Greg Endo

 Chief Financial Officer

 Greg Endo

 (Principal Financial Officer and

 Principal Accounting Officer)

 /s/ Christian Okonsky

 Chairman of the Board, Director

 Christian Okonsky

 /s/ Jonathan P. Foster

 Director

 Jonathan P. Foster

 /s/ Karin-Joyce Tjon

 Director

 Karin Joyce Tjon