Form 4: Sabby Management Exchanges Volcon Shares for Prefunded Warrants

Sabby Management, a significant shareholder of Volcon, Inc., exchanged 774,569 common shares for an equal number of prefunded warrants, exercisable at a nominal price.

Summary

• Sabby Management, LLC, along with its affiliates, engaged in a transaction with Volcon, Inc. on October 15, 2024.
• The transaction involved Sabby Volatility Warrant Master Fund, Ltd. (SVWMF) exchanging 774,569 shares of Volcon's common stock for 774,569 prefunded warrants.
• Each prefunded warrant allows the holder to purchase one share of Volcon's common stock at an exercise price of $0.00001.
• The prefunded warrants are immediately exercisable and have no expiration date.
• However, there's a limitation: the Reporting Persons cannot exercise the Pre-Funded Warrants if it would cause the aggregate number of shares of Common Stock beneficially owned by them, their affiliates and any persons who are members of a Section 13(d) group with them or their affiliates to exceed 9.99% of the total number of issued and outstanding shares of Common Stock of the Issuer following such exercise.
• Sabby Management, LLC (Advisor) is the investment manager to SVWMF, and Hal Mintz is the manager of Advisor.
• Both Advisor and Mr. Mintz disclaim beneficial ownership of the securities except to the extent of their pecuniary interest.

Sentiment

Score: 6

Explanation: The document itself is neutral, simply reporting a transaction. The impact on Volcon is slightly positive as it provides potential future capital, but the dilution risk keeps the sentiment moderate.

Positives

• The prefunded warrants provide Sabby Management with the potential to increase its stake in Volcon at a minimal exercise price.
• The absence of an expiration date on the warrants offers flexibility in exercising them.

Negatives

• The exchange of shares for warrants may dilute existing shareholders if the warrants are exercised.
• The 9.99% ownership limit restricts Sabby Management's ability to significantly increase its stake through warrant exercise.

Risks

• Potential dilution of existing shareholders if the warrants are exercised.
• The 9.99% ownership cap limits the potential upside for Sabby Management.
• The value of the warrants is dependent on the future performance of Volcon's stock.

Future Outlook

The document does not contain specific forward-looking statements regarding Volcon's future performance or Sabby Management's investment strategy beyond the warrant exercise limitations.

Management Comments

• Advisor and Mr. Mintz disclaim beneficial ownership of the securities except to the extent of their pecuniary interest.

Industry Context

This type of transaction, involving the exchange of shares for warrants, is a relatively common financial maneuver that allows investors to maintain or increase their potential stake in a company while managing their current ownership position. It's often used by investment funds like Sabby Management.

Comparison to Industry Standards

• Similar transactions involving warrants and share exchanges are often seen with companies that have volatile stock prices or are undergoing significant changes.
• The 9.99% ownership limitation is a common clause in warrant agreements to avoid triggering certain regulatory thresholds and reporting requirements.
• Comparable companies that have used similar financing structures include micro-cap and small-cap companies in the technology and biotechnology sectors.

Stakeholder Impact

• Shareholders may experience dilution if the warrants are exercised.
• Volcon may receive a small amount of capital upon warrant exercise.

Next Steps

• Sabby Management may exercise the prefunded warrants in the future, subject to the 9.99% ownership limitation.
• Volcon may benefit from the future exercise of the warrants, receiving a nominal amount of capital.

Key Dates

Keywords

Volcon, Sabby Management, prefunded warrants, share exchange, beneficial ownership, Form 4, VLCN