NOTE 3 – INVENTORY

Inventory consists of the following:

During 2024, the Company lowered the sales price of the Grunt EVO which was sold to dealers and distributors. Since the unit sales price was below the unit cost the Company paid to the manufacturer, the Company wrote down the Grunt EVO finished goods inventory and recorded an expense of $674,379. In March 2025, the Company sold all of the remaining Grunt EVO finished goods.

In October 2024, the Company notified the manufacturer of the Stag that the Company intended to terminate the manufacturing agreement between the parties due to, among other things, significant cost increases for finished units over the original contracted cost. The Company wrote down all of the Stag raw materials inventory as of September 30, 2024. The Company concluded it would not be able to recover the inventory since it was in the manufacturer’s possession at the time, and even if it could the Company does not believe that it could find another manufacturer who could build the Stag without the Company incurring significant additional costs to have the manufacturer set up a production facility. In addition, the Company wrote off all prepaid deposits and advances paid to vendors and the manufacturer of the Stag. The total write-off related to Stag inventory, prepaid inventory and advances was $8,712,644. As noted above, the Company and the manufacturer entered into a settlement agreement and terminated the manufacturing agreement which included giving all raw materials inventory to the manufacturer.

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 off all remaining Grunt raw materials inventory of $1,564,643 upon transfer of the inventory to the Company’s third party manufacturer.

 As of December 31, 2024, the Company has purchase commitments for future payments due for inventory of $376,945.