UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022

For the quarterly period ended June 30, 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:File Number: 001-40623

 

TWIN VEE POWERCATS CO.

(Exact Namename of Registrantregistrant as Specifiedspecified in Its Charter)its charter)

 

Delaware
(State or Other Jurisdictionother jurisdiction of
Incorporationincorporation or Organization)organization)		27-1417610
(I.R.S. Employer
Identification No.)
  
3101 S. US-1US-1
Ft. Pierce, Florida
(Address of Principal Executive Offices)principal executive offices)		34982
(Zip Code)

 

(772) 429-2525

(Registrant’s Telephone Number,telephone number, including Area Code)area code)

 

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

 

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareVEEEThe Nasdaq Stock Market, LLC
(The Nasdaq Capital Market)

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 the 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of November 7, 2022,August 14, 2023, there were 9,520,000 shares of Common Stock, $0.001 par value per share, outstanding.

 

 

TWIN VEE POWERCATS CO.

 

TABLE OF CONTENTS

 

Page No.
 
PART I—FINANCIAL INFORMATION4
Item 1.Condensed Consolidated Financial Statements (Unaudited)4
Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20222023 (Unaudited) and December 31, 202120224
Condensed Consolidated Statements of Operations (Unaudited) for the Three and NineSix Months ended SeptemberJune 30, 20222023 and 202120225
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and NineSix Months ended SeptemberJune 30, 20222023 and 202120226
Condensed Consolidated Statements of Cash Flows (Unaudited) for the NineSix Months ended SeptemberJune 30, 20222023 and 202120227
Notes to the Condensed Consolidated Financial Statements (Unaudited)8
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations1924
Item 3.Quantitative and Qualitative Disclosures About Market Risk2833
Item 4.Controls and Procedures2833
 
PART II—OTHER INFORMATION2934
 
Item 1.Legal Proceedings2934
Item 1A.Risk Factors2934
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds3338
Item 3.Defaults Upon Senior Securities3339
Item 4.Mine Safety Disclosures3339
Item 5.Other Information3339
Item 6.Exhibits3340
SIGNATURES3541

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains 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”). All statements, other than statements of historical facts, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

 

The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on assumptions that we have made in light of our industry experience and our perceptions of historical trends, current conditions, expected future developments, and other factors we believe are appropriate under the circumstances. As you read and consider this Quarterly Report on Form 10-Q, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (many of which are beyond our control), and assumptions. Although we believe that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect our actual operating and financial performance and cause our performance to differ materially from the performance anticipated in the forward-looking statements. We believe these factors include, but are not limited to, those described under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Should one or more of these risks or uncertainties materialize, or should any of these assumptions prove incorrect, our actual operating and financial performance may vary in material respects from the performance projected in these forward-looking statements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.

 

As a result of these and other factors, we may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

 

NOTE REGARDING COMPANY REFERENCES

 

Throughout this Quarterly Report on Form 10-Q, “Twin Vee,” “the Company,” “we” and “our” refer to Twin Vee PowerCats Co.



PART I—FINANCIAL INFORMATION

 

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

TWIN VEE POWERCATS CO, INC.CO.

CONDENSED CONSOLIDATED BALANCE SHEETS

 (Unaudited)

 

            
 September 30, December 31, June 30, December 31,
 2022 2021 2023 2022
        
Assets                
Current Assets                
Cash and cash equivalents $19,975,562  $6,975,302 
Cash, cash equivalents and restricted cash $26,337,127  $23,501,007 
Accounts receivable  1,610   5,137   570,133   14,167 
Marketable securities  —   2,996,960   999,609   1,481,606 
Inventories  4,393,238   1,799,769   5,576,480   4,008,332 
Deferred offering costs  10,000   105,500 
Due from affiliated companies  368,093   286,922 
Prepaid expenses and other current assets  1,500,153   903,756   454,751   882,417 
Total current assets  26,248,656   13,073,346   33,938,100   29,887,529 
                
Marketable securities - non current  2,910,936   3,067,137   947,788   1,445,912 
Property and equipment, net  4,774,839   2,883,171   9,556,167   5,535,902 
Operating lease right of use asset  1,264,259   1,550,530   1,092,908   1,329,620 
Security deposit  25,000   25,000   47,517   32,517 
Total Assets $35,223,690  $20,599,184  $45,582,480  $38,231,480 
                
Liabilities and Stockholders’ Equity                
Current Liabilities:                
Accounts payable $1,927,656  $1,200,861  $2,465,400  $2,065,680 
Accrued liabilities  538,312   456,814   1,192,490   1,240,769 
Contract liability – customer deposits  1,026,580   14,100 
Due to affiliated companies  115,043   115,043 
Contract liability  182,335   5,300 
Finance leases liability  178,687   — 
Operating lease right of use liability  387,993   368,602   493,056   479,314 
Total current liabilities  3,995,584   2,155,420   4,511,968   3,791,063 
                
Paycheck Protection Program Loan  —   — 
Economic Injury Disaster Loan  499,900   499,900   499,900   499,900 
Finance leases liability  2,712,885   — 
Operating lease liability - noncurrent  949,495   1,244,164   667,169   919,628 
Total Liabilities  5,444,979   3,899,484   8,391,922   5,210,591 
                
Commitments and contingencies (Note 9)        
Commitments and contingencies (Note 11)  —   — 
                
Stockholders’ equity:                
Preferred stock: 10,000,000 authorized; $0.001 par value; no shares issued and outstanding  —   —   —   — 
Common stock: 50,000,000 authorized; $0.001 par value; 7,020,000 and 7,000,000 shares issued and outstanding, respectively  7,020   7,000 
Common stock: 50,000,000 authorized; $0.001 par value; 9,520,000 shares issued and outstanding  9,520   9,520 
Additional paid-in capital  29,165,138   18,710,256   36,918,233   35,581,022 
Accumulated deficit  (4,447,684)  (2,017,556)  (9,656,223)  (7,154,808)
Noncontrolling interest  5,054,237   — 
Equity attributed to stockholders of Twin Vee PowerCats Co.  27,271,530   28,435,734 
Equity attributable to noncontrolling interests  9,919,028   4,585,155 
Total stockholders’ equity   29,778,711   16,699,700   37,190,558   33,020,889 
                
Total liabilities and stockholders’ equity $35,223,690  $20,599,184  $45,582,480  $38,231,480 

 

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


TWIN VEE POWERCATS CO, INC.CO.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

                        
 Three Months Ended Nine Months Ended Three Months Ended Six months ended
 September 30, September 30, June 30, June 30,
 2022 2021 2022 2021 2023 2022 2023 2022
                
Net sales $8,812,021  $4,118,246  $23,217,634  $10,623,460  $8,124,632  $8,519,613  $17,001,847  $14,405,613 
Cost of products sold  5,477,947   2,508,170   14,001,994   6,209,334   5,864,170   5,072,401   11,519,555   8,524,047 
Gross profit  3,334,074   1,610,076   9,215,640   4,414,126   2,260,462   3,447,212   5,482,292   5,881,566 
                                
Operating expenses:                                
Selling, general and administrative  707,322   512,982   2,027,387   1,090,583   914,430   637,744   1,937,120   1,320,065 
Salaries and wages  2,891,863   1,222,062   7,938,954   3,197,476   3,426,919   2,793,281   6,776,941   5,047,091 
Professional fees  135,311   105,384   573,592   217,592   417,305   193,542   715,022   438,281 
Depreciation and amortization  172,602   31,091   372,511   132,089 
Research and design  283,936   61,091   680,288   61,091 
Depreciation  284,562   119,817   502,838   199,909 
Research and development  261,473   174,807   964,121   396,352 
Total operating expenses  4,191,034   1,932,610   11,592,732   4,698,831   5,304,689   3,919,191   10,896,042   7,401,698 
                                
Loss from operations  (856,960)  (322,534)  (2,377,092)  (284,705)  (3,044,227)  (471,979)  (5,413,750)  (1,520,132)
                                
Other income (expense):                                
Dividend income  252,889   —   487,399   — 
Other income  29,764   148   32,994   148   8,654   2,632   7,103   3,230 
Interest expense  (52,878)  (50,315)  (136,434)  (85,468)  (70,127)  (43,716)  (122,065)  (83,556)
Interest income  30,958   —   63,883   —   16,543   32,901   38,973   32,925 
Loss on disposal of assets  —   —   (49,990)  (254,600)  —   (31,582)  —   (49,990)
Gain from insurance recovery  —   —   —   434,724 
Net change in fair value of marketable securities  (37,993)  (10,576)  (150,569)  (10,576)  (4,957)  (27,038)  3,077   (112,576)
Total other (expenses) income  (30,149)  (60,743)  (240,116)  84,228 
Employee retention credit income  937,482   —   1,267,055   — 
Total other income (expenses)  1,140,484   (66,803)  1,681,542   (209,967)
                                
Net loss before income tax  (887,109)  (383,277)  (2,617,208)  (200,477)
Loss before income tax  (1,903,743)  (538,782)  (3,732,208)  (1,730,099)
Income taxes provision  —   —   —   —   —   —   —   — 
Net loss  (887,109)  (383,277)  (2,617,208)  (200,477)  (1,903,743)  (538,782)  (3,732,208)  (1,730,099)
Less: Net loss attributable to noncontrolling interests  (187,080)  —   (187,080)      (569,100)  —   (1,230,793)  — 
Net loss attributed to stockholders of Twin Vee PowerCats Co, Inc. $(700,029) $(383,277) $(2,430,128) $(200,477)
Net loss attributed to stockholders of Twin Vee PowerCats Co. $(1,334,643) $(538,782) $(2,501,415) $(1,730,099)
                
                                
Basic and dilutive loss per share of common stock $(0.10) $(0.06) $(0.35) $(0.04) $(0.14) $(0.08) $(0.26) $(0.25)
Weighted average number of shares of common stock outstanding  7,013,478   6,282,700   7,004,542   4,769,200   9,520,000   7,000,000   9,520,000   7,000,000 

 

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


TWIN VEE POWERCATS CO, INC.CO.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

For the Threethree and Ninesix months ended SeptemberJune 30, 20212022

 

                 
          Additional     Total
  Preferred Stock Common Stock Paid-in Accumulated Noncontrolling Stockholders’
  Shares Amount Shares Amount Capital Deficit Interests Equity
                 
Balance at December 31, 2020  —  $—   4,000,000  $4,000  $2,551,387  $(1,006,547) $—  $1,548,840 
Net income  —   —   —   —   —   131,949   —   131,949 
Balance at March 31, 2021  —  $—   4,000,000  $4,000  $2,551,387  $(874,598) $—  $1,680,789 
Net income  —   —   —   —   —   50,851   —   50,851 
Balance at June 30, 2021  —  $—   4,000,000  $4,000  $2,551,387  $(823,747) $—  $1,731,640 
Common stock issued for cash          3,000,000   3,000   15,849,037   —       15,852,037 
Stock-based compensation  —   —   —   —   86,571   —   —   86,571 
Net loss  —   —   —   —   —   (383,277)  —   (383,277)
Balance at September 30, 2021  —  $—   7,000,000  $7,000  $18,486,995  $(1,207,024) $—  $17,286,971 
               
          Additional   Total
  Preferred Stock Common Stock Paid-in Accumulated Stockholders’
  Shares Amount Shares Amount Capital Deficit Equity
               
Balance at December 31, 2021  —  $—   7,000,000  $7,000  $18,710,256  $(2,017,556)—$16,699,700 
                             
Stock-based compensation  —   —   —   —   224,832   —   224,832 
Net loss  —   —   —   —   —   (1,191,317)— (1,191,317)
Balance at March 31, 2022  —  $—   7,000,000  $7,000  $18,935,088  $(3,208,873)—$15,733,215 
                             
Stock-based compensation  —   —   —   —   301,891   —   301,891 
Net loss  —   —   —   —   —   (538,782)— (538,782)
Balance at June 30, 2022  —  $—   7,000,000  $7,000  $19,236,979  $(3,747,655)—$15,496,324 

 

For the Threethree and Ninesix months ended SeptemberJune 30, 20222023

 

          Additional     Total
  Preferred Stock Common Stock Paid-in Accumulated Noncontrolling Stockholders’
  Shares Amount Shares Amount Capital Deficit Interests Equity
                 
Balance at December 31, 2021  —  $—   7,000,000  $7,000  $18,710,256  $(2,017,556) $—  $16,699,700 
                                 
Stock-based compensation  —   —   —   —   224,832   —   —   224,832 
Net loss  —   —   —   —   —   (1,191,317)  —   (1,191,317)
Balance at March 31, 2022  —  $—   7,000,000  $7,000  $18,935,088  $(3,208,873) $—  $15,733,215 
                                 
Stock-based compensation  —   —   —   —   301,891   —   —   301,891 
Net loss  —   —   —   —   —   (538,782)  —   (538,782)
Balance at June 30, 2022  —  $—   7,000,000  $7,000  $19,236,979  $(3,747,655) $—  $15,496,324 
                                 
Common stock issued for payment on behalf of parent  —   —   20,000   20   52,380   —   —   52,400 
Subsidiary share issuance  —   —   —   —   9,588,172   —   5,241,317   14,829,489 
Stock-based compensation  —   —   —   —   287,607   —   —   287,607 
Net loss  —   —   —   —   —   (700,029)  (187,080)  (887,109)
Balance at September 30, 2022  —  $—   7,020,000  $7,020  $29,165,138  $(4,447,684) $5,054,237  $29,778,711 

                 
          Additional     Total
  Preferred Stock Common Stock Paid-in Accumulated Noncontrolling Stockholders’
  Shares Amount Shares Amount Capital Deficit Interests Equity
                 
Balance at December 31, 2022  —  $—   9,520,000  $9,520  $35,581,022  $(7,154,808) $4,585,155  $33,020,889 
                                 
 Stock-based compensation  —   —   —   —   482,964   —   —   482,964 
 Net loss  —   —   —   —   —   (1,166,772)  (661,693)  (1,828,465)
Balance at March 31, 2023  —  $—   9,520,000  $9,520  $36,063,986  $(8,321,580) $3,923,462  $31,675,388 
                                 
 Forza share issuance  —   —   —   —   364,886   —   6,564,666   6,929,552 
 Stock-based compensation  —   —   —   —   489,361   —   —   489,361 
 Net loss  —   —   —   —   —   (1,334,643)  (569,100)  (1,903,743)
Balance at June 30, 2023  —  $—   9,520,000  $9,520  $36,918,233  $(9,656,223) $9,919,028  $37,190,558 

   

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


TWIN VEE POWERCATS CO, INC.CO.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

                
 Nine months Ended Six months ended
 September 30, June 30,
 2022 2021 2023 2022
Cash Flows From Operating Activities            
Net loss $(2,617,208) $(200,477) $(3,732,208) $(1,730,105)
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock based compensation  814,330   86,571   972,325   526,723 
Depreciation and amortization  372,511   132,089   502,840   199,909 
Loss on disposal of asset  49,990   224,037   —   49,990 
Change of right-of-use asset and lease liabilities  286,271   288,621   236,712   189,647 
Net change in fair value of marketable securities  150,569   10,576   (3,077)  112,576 
Changes in operating assets and liabilities:                
Accounts receivable  3,527   (212,908)  (555,966)  5,137 
Inventories  (2,593,469)  (1,515,118)  (1,568,148)  (2,569,780)
Prepaid expenses and other current assets  (596,397)  (684,813)  427,666   395,553 
Accounts payable  726,795   888,465   399,720   1,061,573 
Accrued liabilities  81,498   349,269   (48,279)  226,537 
Operating lease liabilities  (275,278)  (265,600)  (238,717)  (182,038)
Contract liabilities – customer deposits  1,012,480   155,853 
Contract liabilities  177,035   518,027 
Net cash used in operating activities  (2,584,381)  (743,435)  (3,430,097)  (1,196,251)
                
Cash Flows From Investing Activities                
Net purchases of investment in trading marketable securities  —   (6,101,461)
Net sale of investment in trading marketable securities   3,002,592    — 
Security deposit  (15,000)  — 
Net sales of investment in trading marketable securities  983,198   2,002,591 
Proceeds from sale of property and equipment  80,000   —   —   80,000 
Purchase of property and equipment  (2,394,169)  (1,221,826)  (1,623,867)  (1,809,486)
Net cash provided by (used in) investing activities  688,423   (7,323,287)
Net cash (used in) provided by investing activities  (655,669)  273,105 
                
Cash Flows From Financing Activities                
Net proceeds from issuance of common stock  15,231,350   15,852,037 
Deferred offering cost  (306,361)  — 
Proceeds from Paycheck Protection Program loan  —   608,224 
Advances to parent  (28,771)  — 
Advances from related parties  —   33,129 
Repayment to related parties  —   (339,576)
Net cash provided by financing activities  14,896,218   16,153,814 
Forza net proceeds from issuance of common stock  6,996,015   — 
Forza deferred offering cost  (66,463)  (141,629)
Finance lease liabilities  (7,666)  — 
Net cash provided by (used in) financing activities  6,921,886   (141,629)
                
Net change in cash and cash equivalents  13,000,260   8,087,092 
Cash at beginning of period  6,975,302   891,816 
Cash and cash equivalents at end of period $19,975,562  $8,978,908 
Net change in cash, cash equivalents and restricted cash  2,836,120   (1,064,775)
Cash, cash equivalents and restricted cash at beginning of period  23,501,007   6,975,302 
Cash, cash equivalents and restricted cash at end of period $26,337,127  $5,910,527 
                
Supplemental Cash Flow Information                
Cash paid for income taxes $—  $— 
Cash paid for interest $121,284  $118,906  $110,395  $73,471 
                
Non Cash Investing and Financing Activities                
Increase in the right-of-use asset and lease liability $—  $655,726 
Common stock issued for payment on behalf of parent $52,400  $  
Finance leases $2,899,238  $— 

 

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


TWIN VEE POWERCATS CO.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBERJUNE 30, 20222023

 

1. Organization and Summary of Significant Accounting Policies

 

Organization

 

Twin Vee PowerCats Co. (“Twin Vee” or the “Company”) was incorporated as Twin Vee Catamarans, Inc., in the state of Florida, on December 1, 2009. On April 7, 2021, the Company filed a Certificate of Conversion to register and incorporate in the state of Delaware and changed the company name to Twin Vee PowerCats Co. The Certificate of Incorporation for Twin Vee PowerCats Co. was also filed on April 7, 2021.

 

On September 1, 2021, the Company formed Fix My Boat, Inc., (“Fix My Boat”), a wholly-owned subsidiary. Fix My Boat will utilize a franchise model for marine mechanics across the country. Fix My Boat has been inactive for the majority of 2022 and the six months ended June 30, 2023, however the Company anticipates focusing resources on this entity by the end of 2023.

 

On October 15, 2021, the Company formed Electra Power Sports,Forza X1, Inc., a wholly-owned subsidiary. was initially incorporated as Electra Power Sports, Inc. on October 15, 2021, and subsequently changed itsthe name to Forza X1, Inc. (“Forza X1” or “Forza”) on October 29, 2021.Prior to Forza’s incorporation on October 15, 2021, the electric boat business was operated as the Company’s Electra Power Sports™ Division. Following the Company’s initial public offering that closed on July 23, 2021 (the “IPO”), it determined in October 2021 that for several reasons, that it would market the Company’s new independent line of electric boats under a new brand name (and new subsidiary).

On April 20, 2023, the Company formed AquaSport Co., a wholly owned subsidiary in the state of Florida in connection with the Company’s plan to lease the assets of former AQUASPORT™ boat brand and manufacturing facility in White Bluff Tennessee.

Merger

On December 5, 2022, pursuant to the terms of the Agreement and Plan of Merger, dated as of September 8, 2022 (the “Merger Agreement”), by and between Twin Vee PowerCats Co. and Twin Vee PowerCats, Inc., a Florida corporation (“TVPC”), TVPC was merged with and into the Company (the “Merger”).

As TVPC did not meet the definition of a business under ASC 805, the merger was not accounted for as a business combination. The Merger was accounted for as a recapitalization of Twin Vee PowerCats, Co., effected through the exchange of TVPC shares for Twin Vee PowerCats, Co. shares, and the cancellation of Twin Vee PowerCats, Co. shares held by Twin Vee Inc. Upon the effective date of the Merger, December 5, 2022, Twin Vee Co. accounted for the Merger by assuming TVPC’s net liabilities. Twin Vee PowerCats, Co.’s financial statements reflect the operations of TVPC. prospectively and will not be restated retroactively to reflect the historical financial position or results of operations of TVPC.

 

Principles of Consolidation

 

The condensed consolidated financial statements include the accounts of Twin Vee and its wholly owned subsidiaries AquaSport Co., and Fix My Boat, Inc., (“Fix My Boat”) and majority owned subsidiary, Forza X1, Inc. (“Forza X1” “Forza”), collectively referred to as the “Company”. The Company’s net loss excludes losses attributable to noncontrolling interests. The Company reports noncontrolling interests in consolidated entities as a component of equity separate from the Company’s equity. All inter-company balances and transactions are eliminated in consolidation.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X of the United States Securities and Exchange Commission (“SEC”). Accordingly, they do not contain all information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.

 

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all the adjustments necessary (consisting only of normal recurring accruals) to present the financial position of the Company as of SeptemberJune 30, 20222023 and the results of operations and cash flows for the periods presented. The results of operations for the threesix months ended SeptemberJune 30, 2022 are2023 is not necessarily indicative of the operating results for the full fiscal year or any future period. These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and related notes thereto for the year ended December 31, 20212022 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2022.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid investments with original maturities of three months or less at the time of purchase. On September 30, 2022 and December 31, 2021, the Company had cash and cash equivalents of $19,975,562 and $6,975,302, respectively. Our cash and cash equivalents as of September 30, 2022, does include $13,940,706, related to Forza which was generated from their IPO.


Concentrations of Credit and Business Risk

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of trade receivables. Credit risk on trade receivables is mitigated as a result of the Company’s use of trade letters of credit, dealer floor plan financing arrangements, and the geographically diversified nature of the Company’s customer base. The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high quality federally insured financial institutions. However, cash balances in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limit of $250,000 are at risk. As of September 30, 2022 and December 31, 2021, the Company had $19,023,055 and $6,725,302, respectively, in excess of FDIC insured limits.

Marketable Securities

Our investments in debt securities are carried at either amortized cost or fair value. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading debt securities as well as realized gains and losses on available-for-sale debt securities are included in net income.2023.

 

Revenue Recognition

 

The Company’s revenue is derived primarily from the sale of boats, motors and trailers to its independent dealers. The Company recognizes revenue when obligations under the terms of a contract are satisfied and control over promised goods is transferred to the dealer. For the majority of sales, this occurs when the product is released to the carrier responsible for transporting it to a dealer. The Company typically receives payment within five business days of shipment. Revenue is measured as the amount of consideration it expects to receive in exchange for a product. The Company offers dealer incentives that include wholesale rebates, retail rebates and promotions, floor plan reimbursement or cash discounts, and other allowances that are recorded as reductions of revenues in net sales in the statements of operations. The consideration recognized represents the amount specified in a contract with a customer, net of estimated incentives the Company reasonably expects to pay. The estimated liability and reduction in revenue for dealer incentives is recorded at the time of sale. Subsequent adjustments to incentive estimates are possible because actual results may differ from these estimates if conditions dictate the need to enhance or reduce sales promotion and incentive programs or if dealer achievement or other items vary from historical trends. Accrued dealer incentives are included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets.

 

Payment received for the future sale of a boat to a customer is recognized as a customer deposit, which is included in contract liabilities on the consolidated balance sheet.deposit. Customer deposits are recognized as revenue when control over promised goods is transferred to the customer. At SeptemberJune 30, 20222023 and December 31, 2021,2022, the Company had customer deposits of $1,026,580182,335 and $14,1005,300, respectively, which is recorded as contract liabilities.liabilities on the consolidated balance sheets. These deposits are expected to be recognized as revenue within a one-year period.

 

Rebates and Discounts

 

Dealers earn wholesale rebates based on purchase volume commitments and achievement of certain performance metrics. The Company estimates the amount of wholesale rebates based on historical achievement, forecasted volume, and assumptions regarding dealer behavior. Rebates that apply to boats already in dealer inventory are referred to as retail rebates. The Company estimates the amount of retail rebates based on historical data for specific boat models adjusted for forecasted sales volume, product mix, dealer and consumer behavior, and assumptions concerning market conditions. The Company also utilizes various programs whereby it offers cash discounts or agrees to reimburse its dealers for certain floor plan interest costs incurred by dealers for limited periods of time, generally ranging up to nine months.


Other Revenue Recognition Matters

 

Dealers generally have no right to return unsold boats. Occasionally, the Company may accept returns in limited circumstances and at the Company’s discretion under its warranty policy. The Company may be obligated, in the event of default by a dealer, to accept returns of unsold boats under its repurchase commitment to floor financing providers, who are able to obtain such boats through foreclosure. The repurchase commitment is on an individual unit basis with a term from the date it is financed by the lending institution through the payment date by the dealer, generally not exceeding 30 months.

 

The Company has excluded sales and other taxes assessed by a governmental authority in connection with revenue-producing activities from the determination of the transaction price for all contracts. The Company has not adjusted net sales for the effects of a significant financing component because the period between the transfer of the promised goods and the customer’s payment is expected to be one year or less.

 

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Some of these judgments can be subjective and complex, and, consequently, actual results may differ from these estimates.

Concentrations of Credit and Business Risk

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of trade receivables. Credit risk on trade receivables is mitigated as a result of the Company’s use of trade letters of credit, dealer floor plan financing arrangements, and the geographically diversified nature of the Company’s customer base. The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high quality federally insured financial institutions. However, cash balances in excess of the Federal Deposit Insurance Corporation (“FDIC”) insured limit of $250,000 are at risk. As of June 30, 2023 and December 31, 2022, the Company had $24,926,490 and $22,666,301, respectively, in excess of FDIC insured limits.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash include all highly liquid investments with original maturities of six months or less at the time of purchase. On June 30, 2023 and December 31, 2022, the Company had cash, cash equivalents and restricted cash of $26,337,127 and $23,501,007, respectively. Included within restricted cash on the Company’s condensed consolidated balance sheets is an irrevocable letter of credit for $200,000, which is being held by a third party bank as collateral.

Marketable Securities

The Company’s investments in debt securities are carried at either amortized cost or fair value. Investments in debt securities that the Company has the positive intent and ability to hold to maturity are carried at amortized cost and classified as held-to-maturity. Investments in debt securities that are not classified as held-to-maturity are carried at fair value and classified as either trading or available-for-sale. Realized and unrealized gains and losses on trading debt securities as well as realized gains and losses on available-for-sale debt securities are included in net income.

Fair Value of Financial Instruments

The Company follows accounting guidelines on fair value measurements for financial instruments measured on a recurring basis, as well as for certain assets and liabilities that are initially recorded at their estimated fair values. Fair Value is defined as the exit price, or the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants as the measurement date. The Company uses the following three-level hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs to value its financial instruments:

●Level 1: Observable inputs such as unadjusted quoted prices in active markets for identical instruments.
●Level 2: Quoted prices for similar instruments that are directly or indirectly observable in the marketplace.
●Level 3: Significant unobservable inputs which are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires a significant judgment or estimation.

Financial instruments measured as fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires it to make judgments and consider factors specific to the asset or liability. The use of different assumptions and/or estimation methodologies may have a material effect on estimated fair values. Accordingly, the fair value estimates disclosed, or initial amounts recorded may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.

The carrying amounts of cash equivalents approximate their fair value due to their liquid or short-term nature, such as accounts receivable and payable, and other financial instruments in current assets or current liabilities.

Inventories

Inventories are valued at the lower of cost and net realizable value, with cost determined using the average cost method. Net realizable value is defined as sales price less cost of completion, disposable and transportation and a normal profit margin. Production costs, consisting of labor and overhead, are applied to ending finished goods inventories at a rate based on estimated production capacity. Excess production costs are charged to cost of products sold. Provisions have been made to reduce excess or obsolete inventories to their net realizable value.

Property and Equipment

Property and equipment is stated at cost, net of accumulated depreciation and amortization, using the straight-line method over the assets’ useful life. Leasehold improvements are amortized over the shorter of the assets’ useful life or the lease term. The estimated useful lives of property and equipment range from three to five years. Upon sale or retirement, the cost and related accumulated depreciation is eliminated from their respective accounts, and the resulting gain or loss is included in results of operations. Repairs and maintenance charges, which do not increase the useful lives of the assets, are charged to operations as incurred.

Impairment of Long-Lived Assets

Management assesses the recoverability of its long-lived assets when indicators of impairment are present. If such indicators are present, recoverability of these assets is determined by comparing the undiscounted net cash flows estimated to result from those assets over the remaining life to the assets’ net carrying amounts. If the estimated undiscounted net cash flows are less than the net carrying amount, the assets would be adjusted to their fair value, based on appraisal or the present value of the undiscounted net cash flows.

Advertising

Advertising and marketing costs are expensed as incurred. During the six months ended June 30, 2023 and 2022, advertising costs incurred by the Company totaled $241,702 and $18,754, respectively, and are included in selling, general and administrative expenses in the accompanying consolidated statements of operations.

Research and Development

The Company expenses research and development costs relating to new product development as incurred. For the six months ended June 30, 2023 and 2022, research and development costs amounted to $964,121 and $396,352, respectively.

Shipping and Handling Costs

Shipping and handling costs include those costs incurred to transport product to customers and internal handling costs, which relate to activities to prepare goods for shipment. The Company has elected to account for shipping and handling costs associated with outbound freight after control over a product has been transferred to a customer as a fulfillment cost. The Company includes shipping and handling costs, including cost billed to customers, in cost of sales in the statements of operations. All manufactured boats are free on board (FOB), from the Fort Pierce manufacturing plant. Dealers are required to either pick up the boats themselves or contract with a transporter. For the six months ended June 30, 2023, and 2022, shipping and handling costs amounted to $395,767 and $54,081, respectively. These costs have increased by $341,686, due to adding dealers in the New England stated and Michigan, compared to the prior year, when all of the boats were shipped to the states in the southeast portion of the United States.

Leases

The Company determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets and lease liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The Company calculates the associated lease liability and corresponding ROU asset upon lease commencement using a discount rate based on a credit-adjusted secured borrowing rate commensurate with the term of the lease. The operating lease ROU asset also includes any lease payments made and is reduced by lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expenses for lease payments is recognized on a straight-line basis over the lease term.

Supplier Concentrations

 

The Company is dependent on the ability of its suppliers to provide products on a timely basis and on favorable pricing terms. The loss of certain principal suppliers or a significant reduction in product availability from principal suppliers could have a material adverse effect on the Company. Business risk insurance is in place to mitigate the business risk associated with sole suppliers for sudden disruptions such as those caused by natural disasters.

 

The Company is dependent on third-party equipment manufacturers, distributors, and dealers for certain parts and materials utilized in the manufacturing process. During the ninesix months ended SeptemberJune 30, 2023, the Company purchased all engines for its boats under supplier agreements with two vendors. During the six months ended June 30, 2022, the Company purchased all engines for its boats under a supply agreementsupplier agreements with a singleone vendor. For the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, total purchases to this vendorthese vendors were $4,025,9563,562,550 and $2,805,7392,702,733, respectively.

Employee Retention Credit

On Mach 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law providing numerous tax provisions and other stimulus measures, including an employee retention credit (“ERC”), which is a refundable tax credit against certain employment taxes. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 extended and expanded the availability of the ERC.

Pursuant to the employee retention credit, eligible employers could receive a 50% - 70% credit on qualified wages against their employment taxes each quarter during the eligible period in 2020 and 2021, respectively, with any excess credits eligible for refunds. During the six months ended June 30, 2023, the Company recognized income related to the employee retention credit of $1,267,055 upon completion of an analysis providing reasonable assurance that the Company met the conditions set forth in the CARES Act. The employee retention credit was recorded in the condensed consolidated statement of operations for the six months ended June 30, 2023.

Stock-Based Compensation

The Company recognizes stock-based compensation costs for its restricted stock measured at the fair value of each award at the time of grant, as an expense over the period during which an employee is required to provide service. Compensation cost is recognized over the service period for the fair value of awards that vest.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recover or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is entirely dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversals of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

The Company files income tax returns in the U.S. federal jurisdiction and various states.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments Credit Losses —Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected, which includes the Company’s accounts receivable. This ASU was adopted by the Company for reporting periods beginning after December 15, 2022.

The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

 

2. Marketable securities

 

Assets and liabilities measured at fair value on a recurring basis based on Level 1 and Level 2 fair value measurement criteria as of SeptemberJune 30, 20222023 and December 31, 20212022 are as follows:

  

Schedule of fair value marketable securities                            
   Fair Value Measurements Using   Fair Value Measurements Using  
 Balance as of September 30, 2022 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Balance as of
June 30, 2023		 Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Nonobservable Inputs
(Level 3)
Marketable securities:                            
Corporate bonds $2,418,689  $—  $2,418,689 
Corporate Bonds $1,451,161  $—  $1,451,161  $— 
Certificates of Deposits  492,247   —   492,247   496,235   —   496,235   — 
Total marketable securities $2,910,936  $—  $2,910,936  $1,947,396  $—  $1,947,396  $— 

 

   Fair Value Measurements Using   Fair Value Measurements Using  
 Balance as of December 31, 2021 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Balance as of
December 31, 2022		 Quoted Pricesin
Active Markets for
Identical Assets
(Level 1)		 Significant Other
Observable Inputs
(Level 2)		 Significant
Nonobservable Inputs
(Level 3)
Marketable securities:                            
Corporate bonds $5,549,670  $—  $5,549,670 
Corporate Bonds $2,436,333  $—  $2,436,333  $— 
Certificates of Deposits  514,427   —   514,427   491,185   —   491,185   — 
Total marketable securities $6,064,097  $—  $6,064,097  $2,927,518  $—  $2,927,518  $— 

 

The Company’s investments in US government bonds are measured based on publicly available quoted market prices for identical securities as of September 30, 2022 and December 31, 2021. The Company’s investments in corporate bonds, commercial paper and certificatedcertificates of deposits are measured based on quotes from market makers for similar items in active markets.


3. Inventories

 

At SeptemberJune 30, 20222023 and December 31, 20212022 inventories consisted of the following:

 

Schedule of inventories            
 September 30, December 31, June 30, December 31,
 2022 2021 2023 2022
Raw Materials $4,138,044  $1,518,947  $4,685,317  $3,406,371 
Inventory in transit  694,413   222,607 
Work in Process  255,194   240,256   155,253   246,734 
Finished Product  —   40,566   41,497   132,620 
Total Inventory $4,393,238  $1,799,769  $5,576,480  $4,008,332 

 

4. Property and Equipment

 

At SeptemberJune 30, 20222023 and December 31, 2021,2022, property and equipment consisted of the following:

 

Schedule of property and equipment            
 September 30, December 31, June 30, December 31,
 2022 2021 2023 2022
Machinery and equipment $1,934,869  $1,343,797  $2,315,568  $1,977,482 
Furniture and fixtures  9,636   1,850   22,487   20,335 
Land  1,000,000   — 
Leasehold improvements  959,541   786,199   1,140,224   950,132 
Software and website development  147,334   113,120   90,396   148,693 
Computer hardware and software  100,113   76,598   277,217   123,088 
Boat molds  2,215,350   778,229   4,356,966   2,277,664 
Vehicles  95,536   101,984   143,360   94,534 
Electric prototypes and tooling  142,526   142,526   142,526   142,526 
Assets under construction  1,628,654   859,839 
  5,604,905   3,344,303   11,117,398   6,594,293 
Less accumulated depreciation and amortization  (830,066)  (461,132)  (1,561,231)  (1,058,391)
 $4,774,839  $2,883,171  $9,556,167  $5,535,902 

 

Depreciation and amortization expense of property and equipment for the ninethree months ended SeptemberJune 30, 2023 and 2022 and 2021 isare $372,511284,562 and $132,089119,817, respectively. Depreciation and amortization expense of property and equipment for the six months ended June 30, 2023 and 2022 are $502,840 and $199,909, respectively.

 

5. Leases – Related Party

 

Operating right of use (“ROU”) assets and operating lease liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating right of use assets represent ourthe Company’s right to use an underlying asset and is based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates incremental secured borrowing rates corresponding to the maturities of the leases. WeThe Company used used the U.S. Treasury rate of 0.36% at SeptemberJune 30, 20222023 and December 31, 2021.2022.

 

The Company’s office lease contains rent escalations over the lease term. The Company recognizes expense for this office lease on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term.

 

The Company leases its office and warehouse facilities, and the land which are located at 3101 S US-1, Fort Pierce, Florida (the “Property”) from Visconti Holdings, LLC. Visconti Holdings, LLC is a single member LLC that holds the ownership of the property, and its sole member is Joseph C. Visconti, the CEO of the Company and the CEO and majority shareholder of the Company’s parent company.Company. The Company entered into the lease on January 1, 2020, and as amended January 1, 2021, the lease has a term of five5 years. The current base rent payment is $30,000 per month including property taxes and the lease required a $25,000 security deposit. The base rent will increase five percent (5%) on the anniversary of each annual term.

 

At SeptemberJune 30, 20222023 and December 31, 2021,2022, supplemental balance sheet information related to leases were as follows:


Schedule of leases supplemental balance sheet information        
  September 30, December 31,
  2022 2021
Operating lease ROU asset $1,264,259  $1,550,530 

 

         
  September 30, December 31,
  2022 2021
Operating lease liabilities:        
Current portion $387,993  $368,602 
Non-current portion  949,495   1,244,164 
Total $1,337,488  $1,612,766 
Schedule of leases supplemental balance sheet information    
  June 30, December 31,
  2023 2022
Operating lease ROU asset $973,872  $1,167,551 

  June 30, December 31,
  2023 2022
Operating lease liabilities:        
Current portion $403,707  $393,069 
Non-current portion  644,097   851,096 
Total $1,047,804  $1,244,165 

 

At SeptemberJune 30, 2022,2023, future minimum lease payments under the non-cancelable operating leases are as follows:

 

Schedule of maturities of lease liabilities   
Year Ending December 31, 
2022 (excluding the nine months ended September 30, 2022)$94,500 
2023 396,900 
2024 416,745 
2025 437,582 
Total lease payment 1,345,727 
Less imputed interest (8,239)
Total$1,337,488 
Schedule of future lease payments  
Year Ending December 31,  
 2023 (excluding the six months ended June 30, 2023)  $198,450 
 2024   416,745 
 2025   437,582 
 Total lease payment   1,052,777 
 Less imputed interest   (4,973)
 Total  $1,047,804 

 

The following summarizes other supplemental information about the Company’s operating lease:

 

Schedule of operating lease costother supplemental information  
  SeptemberJune 30,
  20222023
Weighted average discount rate  0.36%
Weighted average remaining lease term (years)  3.172.42 

 

6. Leases

Operating right of use (“ROU”) assets and operating lease liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating right of use assets represent the Company’s right to use an underlying asset and is based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates incremental secured borrowing rates corresponding to the maturities of the leases. The Company used the U.S. Treasury rate of 4% at December 31, 2022.

The Company leases a warehouse facility, and the land which are located at 150 Commerce Street, Old Fort, North Carolina (the “Property”) from NC Limited Liability Company. The Company entered into the lease on October 7, 2022, the lease has a term of two years. The current base rent payment is $7,517 per month including property taxes, insurance, and common area maintenance. The lease required a $7,517 security deposit. The base rent will increase three percent (3%) on October 15, 2023.

At June 30, 2023 and December 31, 2022, supplemental balance sheet information related to leases were as follows:

Schedule of leases supplemental balance sheet information    
  June 30, December 31,
  2023 2022
Operating lease ROU asset $119,036  $162,069 

  June 30, December 31,
  2023 2022
Operating lease liabilities:        
Current portion $89,349  $86,245 
Non-current portion  23,072   68,532 
Total $112,421  $154,777 

At June 30, 2023, future minimum lease payments under the non-cancelable operating leases are as follows:

Schedule of future minimum lease payments    
2023 (excluding the six months ended June 30, 2023) $45,777 
2024  69,680 
Total lease payment $115,456 
Less imputed interest  3,035 
Total  112,421 

The following summarizes other supplemental information about the Company’s operating lease:

Schedule of other supplemental information
June 30,
2023
Weighted average discount rate4%
Weighted average remaining lease term (years)1.33

Schedule of operating lease  
  Six Months Ended
June 30, 2023
Operating lease cost $45,100
Total lease cost $45,100

7. Finance Leases

Vehicle and Equipment Lease

The Company has finance leases for a vehicle and a forklift. The Company entered into the forklift lease in January of 2023, with an asset value of $43,579, which is recorded in net property and equipment on the balance sheet, it is a 60-month lease at a 7.5% interest rate. The Company entered into the vehicle lease in February of 2023, with an asset value of $48,826, which is recorded in net property and equipment on the balance sheet, it is a 60-month lease at a 3% interest rate.

AquaSport lease

On April 20, 2023 Twin Vee incorporated AquaSport Co., a wholly owned subsidiary, in the state of Florida in connection with its plan to lease the AQUASPORT™ boat brand and manufacturing facility in White Bluff Tennessee. On May 5, 2023, Twin Vee and AquaSport Co. entered into an agreement with Ebbtide Corporation (“Ebbtide”) providing AquaSport Co. with the right to acquire assets, AQUASPORT™ boat brand, trademarks, 150,000-square-foot manufacturing facility situated on 18.5 acres in White Bluff Tennessee, related tooling, molds, and equipment to build five Aquasport models ranging in size from 21 to 25-foot boats (the “AquaSport Assets”).

Under the Agreement, the Company has the right to purchase the AquaSport Assets from Ebbtide for $3,100,000 during the five-year term of the Agreement (or extension period), less credit for a $300,000 security deposit paid by the Company and $16,000 a month for any rent paid under the Agreement by AquaSport Co. to Ebbtide. AquaSport Co. will lease the AquaSport Assets from Ebbtide under the Agreement at a monthly rent of $22,000 with the option to acquire the AquaSport Assets. The lease is for a term of five years,

commencing June 1, 2023 at a 2.93% interest rate, with one option to renew the lease for an additional five years. In the event AquaSport Co. commits three payment Events of Default (as defined in the Agreement) within any consecutive two-year period or commits any other material Event of Default that is not cured timely and remains uncured, Ebbtide may terminate AquaSport’s rights under the Agreement to acquire the AquaSport Assets. In addition, Ebbtide has the right to terminate the Agreement if an Event of Default occurs. AquaSport’s obligations under the Agreement have been guaranteed by the Company.

Finance leases on AquaSport lease are recorded in property and equipment, net on the balance sheet.

Schedule of finance lease in property and equipment    
  June 30, December 31,
  2023 2022
 Land  $1,000,000  $— 
 Building   100,000   — 
 Equipment   2,135,132   — 

At June 30, 2023 and December 31, 2022, supplemental balance sheet information related to finance leases were as follows:

Schedule of supplemental balance sheet of finance lease    
  June 30, December 31,
  2023 2022
Finance lease liabilities:        
Current portion $178,687  $— 
Non-current portion  2,712,885   — 
Total $2,891,572  $— 

At June 30, 2023, future minimum lease payments under the non-cancelable finance leases are as follows:

Schedule of future minimum lease payments of finance lease  
Year Ending December 31,  
 2023  $120,475 
 2024   284,950 
 2025   284,950 
 2026   284,950 
 2027   284,950 
 Thereafter   1,982,874 
 Total lease payment   3,243,149 
 Less imputed interest   (351,577)
 Total  $2,891,572 

The following summarizes other supplemental information about the Company’s finance lease:

Schedule of summarizez other supplemental information of finance lease
June 30,
2023
Weighted average discount rate3.07%
Weighted average remaining lease term (years)4.91

8. Accrued Liabilities

 

At SeptemberJune 30, 20222023 and December 31, 2021,2022, accrued liabilities consisted of the following:

 

Accrued liabilities ��      
Schedule of accrued liabilities        
 September 30, December 31, June 30, December 31,
 2022 2021 2023 2022
Accrued wages and benefits $172,485  $185,402  $511,067  $333,976 
Accrued Interest  49,052   33,852 
Accrued interest  37,821   47,607 
Accrued bonus  77,000   30,000   241,650   20,000 
Accrued rebates  —   60,000   —   15,000 
Accrued professional fees  73,300   10,225   40,813   89,500 
Accrued operating expense  82,621   62,335   168,910   64,601 
Accrued inventory  —   577,712 
Accrued commission  57,805   — 
Warranty reserve  83,854   75,000   134,424   92,373 
Total  $538,312  $456,814 
Total accrued liabilities $1,192,490  $1,240,769 

7.9. Notes Payable – SBA EIDL Loan

 

On April 22, 2020, the Company received an SBA Economic Injury Disaster Loan (“EIDL”) in the amount of $499,900. The loan is in response to the COVID-19 pandemic. The loan is a 30-year loan with an interest rate of 3.75%, interest only monthly payments of $2,437 to begin October 22, 2022, under the EIDL program, which is administered through the SBA. Under the guidelines of the EIDL, the maximum term is 30 years; however, terms are determined on a case-by-case basis based on each borrower’s ability to repay and carry an interest rate of 3.75%. The EIDL loan has an initial deferment period wherein no payments are due for thirty months from the date of disbursement. The EIDL loan may be prepaid by the Company at any time prior to maturity with no prepayment penalties. The proceeds from this loan must be used solely as working capital to alleviate economic injury caused by the COVID-19 pandemic.

 

As part of the EIDL loan, the Company granted the SBA a continuing security interest in and to any and all collateral to secure payment and performance of all debts, liabilities and obligations of the Company to the SBA under the EIDL loan. The collateral includes substantially all tangible and intangible personal property of the Company.

 

A summary of the minimum maturities of term debt follows for the years set forth below.

 

Schedule of minimum maturities   
Year 
2022$2,171 
2023 8,892 
2024 9,231 
2025 9,583 
2026 and thereafter 470,023 
Total$499,900 
Schedule of minimum maturities  
Year ended December 31,  
 2023  $— 
 2024   — 
 2025   — 
 2026   — 
 2027 and thereafter   499,900 
 Total  $499,900 

 

8.10. Related Party Transactions

 

As discussed in note 5, the Company has leased its Fort Pierce, Florida facilities from a company owned by its CEO.

 

During the ninesix months ended SeptemberJune 30, 2022,2023, and 2021, the Company received cash of $0 and $33,128 from its affiliate companies, paid operating expenses of $28,771 and $0 on behalf of to its affiliate companies, and paid $0 and $339,576 to its affiliate companies, respectively.

During the nine months ended September 30, 2022, and 2021, the Company recorded management fees of $42,2250 and $31,50027,000, respectively, paid to its shareholder parent company.

 

At September 30, 2022 and December 31, 2021, advances from affiliated companies included in due to affiliated companies was $115,043. Approximately $93,000 of the balance is related to an equipment purchase, the remaining balance was related to startup costs for our franchise business.

During the ninesix months ended SeptemberJune 30, 2023 and 2022, Twin Vee received a monthly fee of $6,800 and $5,850, respectively, to provide management services and facility utilization to Forza. This income for Twin Vee, and expense for Forza, has been eliminated in the condensed consolidated financial statements.

 

9.11. Commitments and Contingencies

 

Repurchase Obligations

 

Under certain conditions, the Company is obligated to repurchase new inventory repossessed from dealerships by financial institutions that provide credit to the Company’s dealers. The maximum obligation of the Company under such floor plan agreements totaled approximately $11,825,00010,215,000 or 6854 units, and $4,273,00010,693,000 or 2467 units, as of SeptemberJune 30, 2022,2023, and December 31, 2021,2022, respectively. The Company incurred no impact from repurchase events during the ninesix months ended SeptemberJune 30, 20222023 and year ended December 31, 2021.2022.


Short-term lease

In August of 2022, Forza signed a six-month lease for a duplex, to be used by its employees to minimize travel expenseexpenses as it started construction on its new manufacturing facility, for $2,200 per month, on a property in Black Mountain, North Carolina. During the ninesix months ended SeptemberJune 30, 2023 and 2022, the lease expense was $2,20011,000. and $0, respectively.

 

Litigation

 

The Company is currently involved in various civil litigation in the normal course of business none of which is considered material.

 

Irrevocable line of credit

As of June 30, 2023, the Company had $200,000 of restricted cash included in cash, cash equivalents and restricted cash. This amount represents a deposit to secure an irrevocable letter of credit for a supplier contract with Yamaha. These deposits are held in an interest-bearing account.

10.12. Stockholders’ Equity

 

Twin Vee

 

Common Stock Warrants

 

On October 3, 2022, the Company issued and sold to ThinkEquity LLC, as the underwriter in a firm commitment underwritten public offering (the “Offering”) pursuant to the term of an underwriting agreement that the Company entered into with ThinkEquity LLC on September 28, 2022 (the “Underwriting Agreement”),an aggregate of 2,500,000 shares of the Company’s common stock, par value $0.001 per share, at a public offering price of $2.75 per share, for gross proceeds of $6,875,000, before deducting underwriting discounts, commissions and offering expenses. Pursuant to the Underwriting Agreement, the Company has also issued to the underwriter warrants to purchase up to 143,750 shares of Common Stock. The warrants will be exercisable at a per share exercise price of $3.4375.

As of SeptemberJune 30, 2022,2023, the Company had outstanding warrants to purchase 150,000 shares of common stock issuable at a weighted-average exercise price of $7.50per share that were issued to the representative of the underwriters on July 23, 2021 in connection with the Company’s initial public offering that closed on July 23, 2021 (the “IPO”). The representative’s warrants are exercisable at any time and from time to time, in whole or in part, and expire on July 20, 2026. There was no warrant activity during the ninesix months ended SeptemberJune 30, 2022.2023.

 

Equity Compensation Plan

 

The Company maintains an equity compensation plan (the “Plan”) under which it may award employees, directors and consultants’ incentive and non-qualified stock options, restricted stock units, stock appreciation rights and other stock-based awards with terms established by the Compensation Committee of the Board of Directors which has been appointed by the Board of Directors to administer the Plan. The number of awards under the Plan automatically increased on January 1, 2022.2023. As of SeptemberJune 30, 2022,2023, there were 377,09075,823 shares remaining available for grant under this Plan.

 

Accounting for Stock -Based Compensation

 

Stock Compensation Expense

For the ninethree months ended SeptemberJune 30, 20222023 and 2021,2022, the Company recorded $814,330489,361 and $86,571301,891, respectively, of stock-based compensation expense. For the six months ended June 30, 2023 and 2022, the Company recorded $972,325 and $526,723, respectively, of stock-based compensation expense. Stock-based compensation expense which is included in salaries and wages on the accompanying condensed consolidated statement of operations. Included in the $814,330972,325 of stock options expense for the ninesix months ending SeptemberJune 30, 2022,2023, is Forza’s stock-based compensation expense of $158,705682,980.

 

Stock Options

 

Under the Company’s 2021 Stock Incentive Plan the Company has issued stock options. A stock option grant gives the holder the right, but not the obligation to purchase a certain number of shares at a predetermined price for a specific period of time. The Company typically issues options that vest pro rata on a monthly basis over various periods. Under the terms of the Plan, the contractual life of the option grants may not exceed ten years.

 

The Company utilizes the Black-Scholes model to determine fair value of stock option awards on the date of grant. The Company utilized the following assumptions for option grants during the ninesix months ended SeptemberJune 30, 2023 and 2022:


Schedule of share-based payment award stock options valuation assumptions
Nine months ended
September 30,
2022
Expected term5 years
Expected average volatility49 - 50%
Expected dividend yield—
Risk-free interest rate1.50 – 2.96%

Schedule of assumptions        
     Six months ended
     June 30,
   2023   2022 
Expected term    5 years       4.94 - 5 years   
Expected average volatility  49 - 51%    49 - 55%  
Expected dividend yield  —   — 
Risk-free interest rate  1.50 –4.45%    0.72 - 1.00% 

  

The expected volatility of the option is determined using historical volatilities based on historical stock price of comparable boat manufacturing companies. The Company estimated the expected life of the options granted based upon historical weighted average of comparable boat manufacturing companies. The risk-free interest rate is determined using the U.S. Department of the Treasury yield curve rates with a remaining term equal to the expected life of the option. The Company has never paid a dividend, and as such the dividend yield is 0.0%

 

Schedule of expected volatility of option           
 Options Outstanding Weighted Average
 Number of Weighted Average Remaining life
 Options Exercise Price (years)
      
Outstanding, December 31, 2021 713,612  $5.13   9.54 
Granted 277,500   3.84   10.00 
Exercised —   —   — 
Forfeited/canceled (7,624)  (4.10)  (9.10)
Outstanding, September 30, 2022 983,488  $4.81   8.94 
            
Exercisable options, September 30, 2022 463,707  $4.81   8.93 
Schedule of expected volatility of option      
  Options Outstanding Weighted Average  
  Number of Weighted Average Remaining life  
  Options Exercise Price (years) Fair value of option
         
 Outstanding, December 31, 2022   1,283,571  $4.14   8.95   2,256,233 
 Granted   —   —   —   — 
 Exercised   —   —   —     
 Expired   (44,394)  (5.40)  —   (101,960)
 Forfeited/canceled   —   —   —   — 
 Outstanding, June 30, 2023   1,239,177  $4.09   8.47   2,154,274 
                   
 Exercisable options, June 30, 2023   753,175  $4.43   8.34     

 

At SeptemberJune 30, 2022,2023, 519,781486,002 Twin Vee options are unvested and expected to vest over the next fivefour years.

 

Forza

 

Common Stock Warrants

 

As of September 30, 2022, the CompanyForza had outstanding warrants to purchase 172,500 shares of common stock issuable at a weighted-average exercise price of $6.25 per share that were issued to the representative of the underwriters on August 16, 2022 in connection with Forza’s IPO. Forza also had outstanding warrants to purchase 306,705 shares of common stock issuable at a weighted-average exercise price of $1.88 per share that were issued to the Company’s IPO.representative of the underwriters on June 14, 2023 in connection with Forza’s secondary offering. The representative’s warrants are exercisable at any time and from time to time, in whole or in part, and expire on August 16, 2027.2027 and June 16, 2028, respectively. There was no warrant activity during the ninesix months ended SeptemberJune 30, 2022.2023.

 

Equity Compensation Plan

 

The CompanyForza maintains an equity compensation plan (the “Plan”) under which it may award employees, directors and consultants’ incentive and non-qualified stock options, restricted stock, stock appreciation rights and other stock-based awards with terms established by the Compensation Committee of the Board of Directors which has been appointed by the Board of Directors to administer the plan. The number of awards under the Plan will automatically increase on January 1, 2023. As of SeptemberJune 30, 2022,2023, there were 683,500568,750 shares remaining available for grant under this Plan. Stock based compensation expense is included in the Statements of Operations, under salaries and wages.


Accounting for Stock -Based Compensation

 

For the ninethree months ended SeptemberJune 30, 20222023 and 2021,2022, Forza recorded $1,587,058341,817 and $0, respectively, of stock-based compensation expense. For the six months ended June 30, 2023 and 2022, Forza recorded $682,980 and $0, respectively, of stock-based compensation expense. Stock-based compensation expense which is included in salaries and wages on the accompanying condensed consolidated statement of operations.

 

Stock Options

 

Under Forza’s 2022 Stock Incentive Plan (the “Forza Plan”), Forza has issued stock options. A stock option grant gives the holder the right, but not the obligation, to purchase a certain number of shares at a predetermined price for a specific period of time. Forza typically issues options that vest pro rata on a monthly basis over various periods. Under the terms of the Forza Plan, the contractual life of the option grants may not exceed ten years.

 

FprzaForza utilizes the Black-Scholes model to determine fair value of stock option awards on the date of grant. Forza utilized the following assumptions for option grants during the ninesix months ended SeptemberJune 30, 2022:2023:

 

Schedule of share-based payment award stock options valuation assumptions   
 Nine monthsYear ended
 SeptemberJune 30,
 20222023
Expected term 5 years 
Expected average volatility 111 - 115%%
Expected dividend yield — 
Risk-free interest rate 2.98 - 3.62%%

 

The expected volatility of the option is determined using historical volatilities based on historical stock price of comparable boat manufacturing companies. Forza estimated the expected life of the options granted based upon historical weighted average of comparable boat manufacturing companies. The risk-free interest rate is determined using the U.S. Department of the Treasury yield curve rates with a remaining term equal to the expected life of the option. Forza has never paid a dividend, and as such the dividend yield is 0.0%.

 

Schedule of expected volatility of option            
  Options Outstanding Weighted Average
  Number of Weighted Average Remaining life
  Options Exercise Price (years)
       
Outstanding, December 31, 2021  —  $0.00   0.00 
Granted  816,500   5.00   10.00 
Exercised  —   —   — 
Outstanding, September 30, 2022  816,500  $5.00   9.87 
             
Exercisable options, September 30, 2022  47,194  $5.00   9.87 
Schedule of expected volatility of option      
  Options Outstanding Weighted Average  
  Number of Weighted Average Remaining life  
  Options Exercise Price (years) Fair value of option
         
 Outstanding, December 31, 2021   —    $—    —    $—   
 Granted   1,441,500   3.41   10.00   4,009,913 
 Exercised   —     —           
 Forfeited/canceled   —     —     —     —   
 Outstanding, December 31, 2022   1,441,500  $3.41   0.07  $4,009,913 
 Granted   —     —     —     —   
 Exercised   —     —           
 Forfeited/canceled   (36,944)  1.33   9.74   —   
 Outstanding, June 30, 2023   1,404,556  $3.46   9.27  $4,009,913 
                   
 Exercisable options, June 30, 2023   360,125  $3.98   9.22     

 

At September 30, 2022,13. 769,306Customer Concentration Forza options are unvested and expected to vest over the next five years.

 

11. Major CustomersSignificant dealers are those that account for greater than 10% of the Company’s revenues and purchases.

 

During the ninesix months ended SeptemberJune 30, 2023, one individual dealer had sales of over 10% of the Company’s total sales, that dealer represented 20% of total sales. During the six months ended June 30, 2022, three individual customersdealers had sales of over 10%10% of ourthe Company’s total sales, and combined these three customersdealers represented 37% of total sales. During the nine months end September 30, 2021, five individual customers had sales of over 10% of our total sales and combined these five customers represented 6746% of total sales.


12.14. Segment

 

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.

 

The Company reported its financial performance based on the following segments: Gas-powered Boats, Franchise and Electric Boats.

 

The Company evaluates the performance of its reportable segments based on net sales and operating income. Net sales for business segments are generally based on the sale of boats and the sale of franchises. Income (loss) from operations for each segment includes net sales to third parties, related cost of sales and operating expenses directly attributable to the segment. Operating income for each segment excludes other income and expense.expenses. The Company does not include intercompany transfers between segments for management reporting purposes.

 

The following table shows information by reportable segments for the three and ninesix months ended SeptemberJune 30, 20222023 and 2021:2022:

 

Reconciliation of operating profit (loss) from segments to consolidated                
For the Nine Months Ended September 30, 2022 Gas-Powered Boats Franchise Electric Boat and Development Total
 Net sales $23,218,666  $(1,032) $—  $23,217,634 
Cost of products sold  13,910,332   1,027   90,635   14,001,994 
Operating expense
  9,468,564   34,507   2,089,661   11,592,732 
Loss from operations  (160,230)  (36,566)  (2,180,296)  (2,377,092)
Other expense  (181,113)  (30,059)  (28,944)  (240,116)
Net loss $(341,343) $(66,625) $(2,209,240) $(2,617,208)

For the three months ended June 30, 2023

 

                 
For the Nine Months Ended September 30, 2021 Gas-Powered Boats Franchise Electric Boat and Development Total
 Net sales $10,623,460  $—  $—  $10,623,460 
 Cost of products sold  6,209,334   —   —   6,209,334 
 Operating expense
  4,581,634   —   117,197   4,698,831 
Loss from operations  (167,508)  —   (117,197)  (284,705)
Other income (expense)  153,101   —   (68,873)  84,228 
 Net loss $(14,407) $—  $(186,070) $(200,477)

                 
For the Three Months Ended September 30, 2022 Gas-Powered Boats Franchise Electric Boat and Development Total
Net sales $8,812,021  $—  $—  $8,812,021 
Cost of products sold  5,411,404   —   66,543   5,477,947 
Operating expense  3,210,920   529   979,585   4,191,034 
Income (loss) from operations  189,697   (529)  (1,046,128)  (856,960)
Other (expense) income  (29,671)  (3,943)  3,465   (30,149)
Net income (loss) $160,025  $(4,471) $(1,042,663) $(887,109)
Schedule of reportable segments                
  Gas-Powered Boats Franchise Electric Boat and Development Total
Net sales $8,124,632  $—  $—  $8,124,632 
Cost of products sold  5,823,374   —   40,796   5,864,170 
Operating expense  3,725,689   278   1,578,722   5,304,689 
Loss from operations  (1,424,431)  (278)  (1,619,518)  (3,044,227)
Other income (expense)  1,008,741   (4,122)  135,865   1,140,484 
Net loss $(415,690) $(4,400) $(1,483,653) $(1,903,743)

 

                 
For the Three Months Ended September 30, 2021 Gas-Powered Boats Franchise Electric Boat and Development Total
Net sales $4,118,246  $—  $—  $4,118,246 
Cost of products sold  2,508,170   —   —   2,508,170 
Operating expense  1,850,380   —   82,230   1,932,610 
Loss from operations  (240,304)  —   (82,230)  (322,534)
Other loss  (57,452)  —   (3,291)  (60,743)
Net loss $(297,756) $—  $(85,521) $(383,277)

For the three months ended June 30, 2022

                 
  Gas-Powered Boats Franchise Electric Boat and Development Total
Net sales $8,519,613  $—  $—  $8,519,613 
Cost of products sold  5,059,389   —   13,012   5,072,401 
Operating expense  3,356,381   7,723   555,087   3,919,191 
Income (loss) from operations  103,843   (7,723)  (568,099)  (471,979)
Other expense  (31,089)  (3,882)  (31,832)  (66,803)
Net income (loss) $72,754  $(11,605) $(599,931) $(538,782)

For the six months ended June 30, 2023

                 
  Gas-Powered Boats Franchise Electric Boat and Development Total
Net sales $17,001,847  $—  $—  $17,001,847 
Cost of products sold  11,428,818   —   90,737   11,519,555 
Operating expense  7,236,112   1,399   3,658,531   10,896,042 
Loss from operations  (1,663,083)  (1,399)  (3,749,268)  (5,413,750)
Other income (expense)  1,429,242   (8,184)  260,484   1,681,542 
Net loss $(233,841) $(9,583) $(3,488,784) $(3,732,208)

For the six months ended June 30, 2022

                 
  Gas-Powered Boats Franchise Electric Boat and Development Total
Net sales $14,406,645  $(1,032) $—  $14,405,613 
Cost of products sold  8,498,930   1,027   24,090   8,524,047 
Operating expense  6,309,997   33,978   1,057,723   7,401,698 
Loss from operations  (402,282)  (36,037)  (1,081,813)  (1,520,132)
Other expense  (151,442)  (26,116)  (32,409)  (209,967)
Net loss $(553,724) $(62,153) $(1,114,222) $(1,730,099)

 

Property and equipment, net classified by business were as follows:

 

Schedule of segment reporting information by segment       
 September 30, December 31,
 2022 2021
Gas-Powered Boats$4,143,587  $2,547,410 
Franchise$—  $100,196 
Electric-Boats$631,252  $235,565 

Schedule of property and equipment, net classified by business    
  June 30, December 31,
  2023 2022
 Gas-Powered Boats  $8,558,194  $4,770,496 
 Franchise  $—  $— 
 Electric-Boats  $997,973  $765,406 

 

13.15. Subsequent Events

 

The Company has evaluated all event or transactions that occurred after SeptemberJune 30, 20222023 through November 7, 2022,August 13, 2023, which is the date that the condensed consolidated financial statements were available to be issued. During this period, there were no material subsequent events requiring recognition or disclosure, other than the ones described below.disclosure.

On October 3, 2022, the Company issued and sold to ThinkEquity LLC, as the underwriter in a firm commitment underwritten public offering (the “Offering”) pursuant to the term of an underwriting agreement that the Company entered into with ThinkEquity LLC on September 28, 2022 (the “Underwriting Agreement”) ,an aggregate of 2,500,000 shares of the Company’s common stock, par value $0.001 per share, at a public offering price of $2.75 per share, for gross proceeds of $6,875,000, before deducting underwriting discounts, commissions and offering expenses. Pursuant to the Underwriting Agreement, the Company has also issued to the underwriter warrants to purchase up to 143,750 shares of Common Stock.

On October 7, 2022, Forza signed a two-year lease agreement, on a warehouse facility to begin building out its prototype boats. The monthly rent will be $6,600 the first year and $6,798 the second year.


23

ITEM 2. 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 together with our financial statements and related notes included in this Quarterly Report on Form 10-Q. The following discussion contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q. This discussion should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto. You should also review the disclosure under the heading “Risk Factors” in this Quarterly Report on Form 10-Q and under Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 20212022 for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

 

OVERVIEW

 

We are a designer, manufacturer and marketer of recreational and commercial power catamaran boats. We believe our company has been an innovator in the recreational and commercial power catamaran industry. We currently have 813 gas-powered models in production ranging in size from our 24-foot, dual20-foot mono hull, single engine, center console to our newly designed 40-foot offshore 400 GFX. OurGFX catamaran, quad engines. While our twin-hull catamaran running surface, known as a symmetrical catamaran hull design, adds to the Twin Vee ride quality by reducing drag, increasing fuel efficiency, and offering users a stable riding boat. Twin Vee’s home base operations in Fort Pierce Florida is a 7.5-acre facility with several buildings totaling over 75,000 square feet. We employed approximately 160 people on September 30, 2022, someboat, our new mono hull line represents the largest portion of whom have been with our company for over twenty years.the overall market.

 

We have organized our business into three operating segments: (i) our gas-powered boat segment which manufactures and distributes gas-powered boats under the Twin Vee name;and AquaSport names; (ii) our electric-powered boat segment which is developing fully electric boats, through our whollymajority owned subsidiary, Forza X1, Inc., a Delaware corporation (“Forza”) and (iii) our franchise segment which is developing a standard product offering and will be selling franchises across the United States through our wholly owned subsidiary, Fix My Boat, Inc., a Delaware corporation.

 

Our gas-powered boats allow consumers to use them for a wide range of recreational activities including fishing, diving and water skiing and commercial activities including transportation, eco tours, fishing and diving expeditions. We believe that the performance, quality and value of our boats position us to achieve our goal of increasing our market share and expanding the power catamaran boating market. We currently primarily sell our boats through a current network of 2123 independent boat dealers in 2637 locations across North America and the Caribbean who resell our boats to the end user Twin Vee and AquaSport customers. We continue recruiting efforts for high quality boat dealers and seek to establish new dealers and distributors domestically and internationally to distribute our boats as we grow our production and introduce new models. Our gas-powered boats are currently outfitted with gas-powered outboard combustion engines.

 

Due to the growing demand for sustainable, environmentally friendly electric and alternative fuel commercial and recreational vehicles, our majority owned subsidiary, Forza, X1, Inc., is designing and developing a line of electric-powered catamaran boats ranging in size from 18-feet to 28-feet. Forza’s initial two models, the FX1 Dual Console and FX1 Center Console, are being designed to be 24-foot in length, have an 8’ beam or width and utilize a catamaran hull surface to reduce drag and increase run times. The initial launch of FX1 will include our proprietary single electric outboard motor.boats. Our electric boats are being designed as fully integrated electric boats including the hull, outboard motor and control system. To date, we have completed the design of the 25-foot FX1 dual console model, including hull,Forza X1 has built-out and tested multiple Forza company units, including: three offshore-style catamarans, two bay boat-style catamarans, one deck and small parts.This design has gone from an intellectual concept in CAD to fiberglass and foam plugs, fiberglass molds and, finally, working boat parts in just over one year. On October the 28th, the running surface of the boat and allthree 22-foot center console (F22) monohulls. In addition, Forza has also electrified a pontoon boat for a major components were tested successfully for several hours onnational pontoon manufacturer. We are in the Indian River Lagoon in Fort Pierce, Florida. Whileprocess of an additional pontoon electrification project and are building an additional five monohulls. Each build cycle includes improvements and involves extensive duration and performance testing. The engine design and lower units and the motor and control systems are continuously improved with each iteration. Cooling system improvements have also been successfully trialed previously, this wasprioritized and have yielded a myriad of benefits to runtime, speed, and range. We continue to iterate the first voyagethat included all major components, production batteries, fully functioning “alpha” engine design, control system - including 22” Garmin screen,value engineering of parts and Osmosis telematics unit. The performancelightweighting of the boat exceeded all expectations and will provide a great baseline for improvements, iterations, and design enhancements.engine components. We are experimenting with our first 300 HP stacked motor design. We anticipate revenues from the sale of these fully integrated electric boats and motors to commence in late 2023. Forza X1 will continue to build prototype engines and boats for the next six to nine months.


Through

During the first nine monthssecond quarter of 2022,2023, we continued to experience strong sales forsaw a small decrease in demand of our products.productions. Our company’s objectives have been to add new, larger boat models to our GFX lineup, expand our dealers and distribution network, and increase unit production to fulfill our customer and dealer orders. We have made significant progress on all frontsnow added our monohull line, shipping our first model of the monohull, the 22 foot, in the first nine months ended September 30, 2022, we started production on our new 260GFX and we unveiled our 400GFX at our dealer meeting in JulyFebruary of 2022, we have added to our dealer network, we now have 21 dealers and 26 locations.2023. We have increased our productionsales by 69%,18% for the threefirst six months ended September 30, 2022of 2023, compared to the three months ended September 30, 2021, which has increased our net revenue up 119% for the nine months ended September 30, 2022. For the three months ended September 30, 2022, our net revenue increased 114%shipping 129 boats compared to 96 in 2022, a 33% increase. The average selling price of our units did decrease by 13%, in the three months ended September 30, 2021. While net sales growth has been significant,first six month of 2023 down to approximately $132,000. This is due to the investments weinclusion of our monohull boats which have an average selling price of approximately $60,000 per unit.

We are making also increases our labor, operating, sales and general administration costs. Our manufacturing process is labor intensive, and withmonitoring the overall market carefully, the addition of new modelsthe monohull boat accounted for 17% of our total sales in the first six months. We anticipate that sales of the monohull will continue to our production line we have added staff and expanded our training program.

increase,

 

As we move forward, we anticipate our operating income to be moderate toward breakeven for our core gas-powered boat segment, as we bring our new Tennessee facility on line, however, our electric boat division will continue to incur losses as we continue to develop our fully integrated electric boats, which includes research and development efforts.

 

Recent Developments

 

On August 16, 2022, Forza issued and sold to ThinkEquity LLC, as the underwriter in a firm commitment underwritten initial public offering (the “Forza IPO”) pursuant to the term of an underwriting agreement that it entered into with ThinkEquity LLC on August 11, 2022 (the “Forza Underwriting Agreement”) ,an aggregate of 3,450,000 shares of Forza’s common stock, par value $0.001 per share, at an initial public offering price of $5.00 per share, for gross proceeds of $17,250,000, before deducting underwriting discounts, commissions and offering expenses. Pursuant to the Forza Underwriting Agreement, Forza also issued to the underwriter warrants to purchase up to 172,500 shares of Common Stock. After the Forza IPO, Forza was no longerApril 20, 2023 we incorporated AquaSport Co., a wholly owned subsidiary, in the state of Florida in connection with our plan to lease the Company.AQUASPORT™ boat brand and manufacturing facility in White Bluff Tennessee. On May 5, 2023, we and AquaSport Co. entered into an agreement with Ebbtide Corporation (“Ebbtide”) providing AquaSport Co. with the right to acquire assets, AQUASPORT™ boat brand, trademarks, 150,000-square-foot manufacturing facility situated on 18.5 acres in White Bluff Tennessee, related tooling, molds, and equipment to build five Aquasport models ranging in size from 21 to 25-foot boats (the “AquaSport Assets”).

 

On October 3, 2022, we issued and soldUnder the agreement, AquaSport Co. has the right to ThinkEquity LLC, aspurchase the underwriter in a firm commitment underwritten public offering (the “Offering”) pursuant toAquaSport assets from Ebbtide for $3,100,000 during the five-year term of an underwritingthe Agreement (or extension period), less credit for a $300,000.00 security deposit paid by us and $16,000 a month for any rent paid under the Agreement by AquaSport Co. to Ebbtide. AquaSport Co. will lease the AquaSport assets from Ebbtide under the agreement that we entered into with ThinkEquity LLC on September 28, 2022 (the “Underwriting Agreement”),an aggregate of 2,500,000 shares of our Common Stock at a public offering pricemonthly rent of $2.75 per share,$22,000 pending AquaSport Co.’s acquisition of the AquaSport assets. The lease is for gross proceedsa term of $6,875,000, before deducting underwriting discounts, commissions and offering expenses. Pursuantfive years, commencing June 1, 2023, with one option to renew the Underwriting Agreement, we also issued to the underwriter warrants to purchase up to 143,750 shares of Common Stock.lease for an additional five years.

 

We continue adding new models to our lineup. We are now adding 3 new STX Sport Tournament models and 4 new, completely unique, special models that we have been designing and will be launching under a new boat brand named LFG Marine Group. LFG Marine will be a 100% owned division within Twin Vee. These initial models are geared more toward the freshwater market but can also be used and enjoyed in the saltwater environment.

The LFG Marine Group will have its own website, its own marketing but the boats will be designed, manufactured, and shipped from our Twin Vee, factory in Fort Pierce, Florida to existing and new dealers. Our initial LFG models will include a 25-foot muti hull center console, 25-foot dual console, 25-foot deck boat and a new 22-foot single engine mono hull. AllResults of these models are past the design stage and the tooling is being completed. The 25-foot dual console is currently being completed in the factory and should be in the water within 2-3 weeks. We anticipate that revenue from LGF boat sales will begin in Q1 of 2023.Operations

 

Results of Operations

Comparison of the Three Months Ended SeptemberJune 30, 20222023 and 20212022

 

The following table provides certain selected financial information for the periods presented:

 

 Three Months Ended     Three Months Ended    
 September 30,     June 30,    
 2022 2021 Change % Change 2023 2022 Change % Change
Net sales $8,812,021  $4,118,246   4,693,775   114% $8,124,632  $8,519,613  $(394,981)  (5%)
Cost of products sold $5,477,947  $2,508,170   2,969,777   118% $5,864,170 $5,072,401 $791,769 16%
Gross profit $3,334,074  $1,610,076   1,723,998   107% $2,260,462 $3,447,212 $(1,186,750) (34%)
Operating expenses $4,191,034  $1,932,610   2,258,424   117% $5,304,689 $3,919,191 $1,385,498 35%
Operating loss $(856,960) $(322,534)  (534,426)  166%
Loss from Operations $(3,044,227) $(471,979) $(2,572,248) 545%
Other income (expense) $1,140,484 $(66,803) $1,207,287 (1,807%)
Net loss $(877,109) $(383,277)  (503,832)  131% $(1,903,743) $(538,782) $(1,364,961) 253%
Net loss per common share: Basic and Diluted $(0.10) $(0.06)  (0.04)  64% $(0.14) $(0.08) $(0.06) 82%
Weighted average number of common shares outstanding: Basic and diluted  7,013,478   6,282,700          9,520,000 7,000,000     

 

Net Sales and Cost Sales

 

Our net sales increased $4,693,775,decreased $394,981, or 114%5% to $8,812,021$8,124,632 for the three months ended SeptemberJune 30, 20222023 from $4,118,246$8,519,613 for the three months ended SeptemberJune 30, 2021.2022. This increasedecrease was due to an increase in the number of monohull boats sold and a decrease in the multi hull boats, with a much higher average price, during the three months ended SeptemberJune 30, 2022.2023. The number of our boats sold during the three months ended SeptemberJune 30, 20222023 increased 65%34% over the three months ended SeptemberJune 30, 2021, due to our increased production plan, enabling us to produce more boats during the quarter.2022. Additionally, we have increased our sale prices and reduced discounts and rebates, to help offsetmove the increases in operating expenses described below, in additionboats from the factory to increased costs of product parts and components and our increased inventory that we are maintaining to protect against supply chain shortages.retail customers.


Gross Profit

 

Gross profits increaseddecreased by $1,723,998,$1,186,750 or 107%34% to $3,334,074$2,260,462 for the three months ended SeptemberJune 30, 20222023 from $1,610,076$3,447,212 for the three months ended SeptemberJune 30, 2021.2022. Gross profit as a percentage of sales, for the three months ended SeptemberJune 30, 2023 and 2022 as 28% and 2021 was 38%40% respectively. The model mix has changed significantly in the second quarter, shifting from our traditional catamarans to our new 220 monohulls. This has put downward pressure on our gross profits for the quarter. The Company is just entering into the monohull market which is highly competitive. As the company moves forward the model mix between mono and 39% respectively.catamarans will have an impact on our gross profit.

 

Total Operating Expenses

 

Our total operating expenses for the three months ended SeptemberJune 30, 2023 and 2022 were $5,304,689 and 2021 were $4,191,034 and $1,932,610$3,919,191 respectively. Operating expenses as a percentage of sales were 48%65% compared to 47%46% in the prior year. Our total operating expenses, for our gas-powered boat segment, for the three months ended SeptemberJune 30, 2023 and 2022 were $3,692,199 and 2021 were $3,210,921 and $1,850,513$3,356,381 respectively. Our gas-powered segment, operating expenses as a percentage of sales were 36% compared to 45% in the prior year, showing a 9% improvement quarter over quarter. Our total operating expenses for Forza, our electric powered boat and development segment, for the three months ended SeptemberJune 30, 2023 and 2022 were $1,578,722 and 2021 were $979,584 and $0$555,087, respectively.

 

Selling, general and administrative expenses increased by approximately 38%43%, or $194,339$276,686 to $707,321$914,430 for the three months ended SeptemberJune 30, 2022,2023, compared to $512,982$637,744 for the three months ended SeptemberJune 30, 2021. A significant portion of this increase, $101,724 was due increased2022. Increased costs in liability and workman’s compensation insurance.insurance, were $30,682. These insurance charges increase based on your employment level and sales revenue, both of which have increased significantly quarter over quarter. Another $42,551$89,029 was due to Forza now carrying cost of being publicly traded. Our sales and marketing expenses for the quarter increased $40,188, the majority of$111,835, this increase wasis due to hostingthe promotion of our products, and the hiring of our marketing team. The need for a dealer meeting in 2023, which we did notstrong sales and marketing team has increased due in 2022.to the addition of Forza, AquaSport and new models for Twin Vee. Our travel expenseexpenses increased approximately $26,662, this is$36,004 primarily due to Forza’s remote workforce being required to travel for development and testing.testing, and travel to Italy to explore a battery partnership. Hiring expenses increased $42,188 primarily due to Forza’s utilization of a recruiting firm to hire specialized engineers. Lastly our dues and subscriptions increased $36,099, we have implemented a new ERP system that requires a monthly subscription fee, as well as engineering software that is being utilized by Forza. These increases were offset by decreased expenses related to Directors and Officers insurance of $227,632. The market has improved significantly for this insurance, and we are no longer a brand new publicly traded firm.

 

Salaries and wages related expenses increased by approximately 137%23%, or $1,669,801$633,638 to $2,891,863$3,426,919 for the three months ended SeptemberJune 30, 2022,2023, compared to $1,222,062$2,793,281 for the three months ended SeptemberJune 30, 2021. Of2022. The majority of the increase in salaries and wages of $1,216,037 was the result of aggressively ramping up of production, which required increasing our productionis due to Forza’s additional staff and adding mid-level staff, as well as the staffing of our Forza segment, which accountbenefits, this accounted for $698,967$567,975 of the increase. Included in salaries and wage related expenses for the three months ended SeptemberJune 30, 20222023 was stock based compensation expense of $287,607 due$489,360, Forza’s portion of that expense was $341,817, which was an increase of $341,817. Twin Vee’s stock based compensation for the three months ended June 30, 2023 decreased $237,379 compared to the issuancethree months ended June 30, 2022. Forza now has a board of optionsdirector and the fees associated with the board were $25,875 for the three months ended June 30, compared to employees.$0, for the three months ended June 30, 2022. We have added a full package of benefits for our employees, in order to retain our quality employees, which resulted in an increase in salaries and wages of $90,113.$54,553. The remaining increase in salaries and wages during the three months ended SeptemberJune 30, 20222023 is associated with taxes.

 

Research and designdevelopment expenses increased by $222,845$86,666, or 50% to $283,936$261,473 for the three months ended SeptemberJune 30, 2022,2023, from $61,091$174,807 for the three months ended SeptemberJune 30, 2021.2022. Part of the use of proceeds from our IPO,initial public offering (“IPO”), was the development of an electric boat and an electric motor.

 

Professional fees increased by 28%116%, or $29,927$223,763 to $135,311$417,305 for the three months ended SeptemberJune 30, 2022,2023, compared to $105,384$193,542 for the three months ended 2021.2022. This increase was also due to the additional costs we incurred associated with Forza being public. We engaged the services of an outside financial consultant, as well as an audit firm for quarterly reporting and SEC legal counsel to fulfill our public company reporting obligations.

 

Depreciation and amortization expense increased by 455%137%, or $141,511$164,745 to $172,602$284,562 for the three months ended SeptemberJune 30, 2022,2023, compared to $31,091$119,817 for the three months ended 2021.2022. This increase is due to the addition of fixed assets, primarily molds, to increase our production levels and throughput.

 

Our other (expenses) decreasedincome increased by 50%, or $30,594$1,207,287 to an expense of $30,149$1,140,484 for the three months ended SeptemberJune 30, 2022,2023, compared to $60,743an expense of $66,803 for the three months ended, 2021.2022. We received $937,482 of government grant income, due to the Employee Retention Credit. Our interestdividend income increased for the quarter by 30,958, compared to 2021, accounting for the change.$252,889.


Net Loss

 

Net loss for the three months ended SeptemberJune 30, 20222023 was $887,109,$1,903,743, compared to $383,277$538,782 for the three months ended SeptemberJune 30, 2021.2022, and increase of $1,364,961. Our electric segment, which does not generate any revenue, at this time, incurred a loss of $1,042,663,$1,483,653, for the three months ended SeptemberJune 30, 2022,2023, related to research and design.development. Our gas-powered segment had incomeincurred a loss of $160,025$233,841 for the three months ended SeptemberJune 30, 2022.2023, this was due to the addition of the AquaSport facility starting to incur expense but not yet generating revenue. Basic and dilutive loss per share of common stock for the three months ended SeptemberJune 30, 2022,2023 was ($0.10)0.14) compared to ($0.06)0.08) for the three months ended SeptemberJune 30, 2021.

2022.

 

Comparison of the NineSix Months Ended SeptemberJune 30, 20222023 and 20212022

The following table provides certain selected financial information for the periods presented:

  Nine months Ended    
  September 30,    
  2022 2021 Change % Change
Net sales $23,217,634  $10,623,460   12,594,174   119%
Cost of products sold $14,001,994  $6,209,334   7,792,660   125%
Gross profit $9,215,640  $4,414,126   4,801,514   109%
Operating expenses $11,592,732  $4,698,831   6,893,901   147%
Loss from operations $(2,377,092) $(284,705)  (2,092,387)  735%
Other income (expense) $240,116  $(84,228)  324,344   (385%)
Net loss $(2,617,208) $(200,477)  (2,416,731)  1,205%
Basic and dilutive loss per share of common stock $(0.37) $(0.04)  (0.33)  789%
Weighted average number of shares of common stock outstanding  7,004,542   4,769,200         

  Six months ended    
  June 30,    
  2023 2022 Change % Change
Net sales $17,001,847  $14,405,613  $2,596,234   18%
Cost of products sold $11,519,555  $8,524,047  $2,995,508   35%
Gross profit $5,482,292  $5,881,566  $(399,274)  (7%)
Operating expenses $10,896,042  $7,401,698  $3,494,344   47%
Loss from operations $(5,413,750) $(1,520,132) $(3,893,618)  256%
Other expense $(1,681,542) $209,967  $(1,891,509)  (901%)
Net loss $(3,732,208) $(1,730,099) $(2,002,109)  116%
Basic and dilutive income per share of common stock $(0.26) $(0.25) $(0.01)  6%
Weighted average number of shares of common stock outstanding  9,520,000   7,000,000         

Net Sales and Cost Sales

 

Our net sales increased by $12,594,174,$2,596,234, or 119%18% to $23,217,634$17,001,847 for the ninesix months ended SeptemberJune 30, 20222023 from $10,623,460$14,405,613 for the ninesix months ended SeptemberJune 30, 2021. We attribute the large2022. This increase was due to strong demand for our product, coupled with ouran increase in production.the number of boats sold during the six months ended June 30, 2023. The number of our boats sold during the ninesix months ended SeptemberJune 30, 20212023 increased 69%34% over the number of our boats sold during the ninesix months ended SeptemberJune 30, 2021,2022, due to our increased production plan, that we focused on sinceenabling us to produce more boats during the third quarter of 2021.quarter. Additionally, we have increased our sale prices and reduced discounts and rebates, and introduced new larger models to help offset the increases in operating expenses described below, in additionmove boats through to increased costs of product parts and components and our increased inventory that we are maintaining to protect against supply chain shortages. Our average revenue per unit for the nine months ended September 30, 2022 increased approximately 35% over revenue per unit for the nine months ended September 30, 2021.retail customers.

 

Gross Profit

 

Gross profit increasedprofits decreased by $4,801,514$399,274, or 109%7% to 9,215,640$5,482,292 for the ninesix months ended SeptemberJune 30, 20222023 from $4,414,126$5,881,566 for the ninesix months ended SeptemberJune 30, 2021.2022. Gross profit as a percentage of net sales, for the ninesix months ended SeptemberJune 30, 2023 and 2022 was 40% as compared32% and 41% respectively. The model mix changed significantly in the second quarter, shifting from our traditional catamarans to 42%our new 220 monohulls. This has put downward pressure on our gross profits for the same period in fiscal 2021.quarter. The Company is just entering into the monohull market which is highly competitive. As the company moves forward the model mix between mono and catamarans will have an impact on our gross profit.


Total Operating Expenses

 

Our total operating expenses for the ninesix months ended SeptemberJune 30, 2023 and 2022 were $10,896,042 and 2021 were $11,592,732 and $4,698,831$7,401,698 respectively. Operating expenses as a percentage of net sales were 50%64% compared to 44%51% in the prior year. Our total operating expenses, for our gas-powered boat segment, for the ninesix months ended SeptemberJune 30, 2023 and 2022 were $7,236,112 and 2021 were $9,520,918 and $4,581,634$6,309,997 respectively. Our gas-powered segments,segment, operating expenses as a percentage of net sales were 41%43% compared to 43%44% in the prior year, showing a 2% improvement quarter over quarter.year. Our total operating expenses for Forza, our electric powered boat and development segment, for the ninesix months ended SeptemberJune 30, 2023 and 2022 were $3,658,531 and 2021 were $2,037,307 and $1,046,129$1,057,723, respectively. Forza operating expenses as a percentage of consolidated sales were 9%.

 

Selling, general and administrative expenses increased by 86%approximately 47%, or $936,804$617,055 to $2,027,387$1,937,120 for the ninesix months ended SeptemberJune 30, 2022, from $1,090,583. A significant portion of the increase, $405,191, resulted from expenses incurred in connection with being a publicly traded company, which we did not incur2023, compared to $1,320,065 for the majoritysix months ended June 30, 2022. Increased costs in liability and workman’s compensation insurance, were $98,371. These insurance charges increase based on your employment level and sales revenue, both of which have increased significantly for the prior period. Our insurance increased by $223,977 over the prior period,six months ended June 30, 2023. Another $167,920 was due to our increased wages andForza now carrying cost of being publicly traded. Our sales level. Our state taxes increased by $122,769. Our advertising and marketing expenses for the period ended June 30, 2023, increased $46,527,$221,947,

this is due to the promotion of our products, to include our new AquaSport brand, as well as production of marketing material which include photo and video shoots. The need for a strong sales and marketing team has increased due to the addition of Forza, AquaSport and new models for Twin Vee. Our travel expenses increased approximately $117,477 primarily due to hosting a dealer sales meeting in 2022, which we did not host in 2021, over concerns regarding Covid. We also have experienced moderate increases several accounts totaling $49,880 of the increase. Selling, generalForza’s remote workforce being required to travel for development and administrative expenses associated specificallytesting, Forza further had two international trips, one to Forza, ourpromote their electric boat and development segment, totaled $267,657.one to explore a battery partnership. Hiring expenses increased $83,800 primarily due to Forza’s utilization of a recruiting firm to hire two specialized engineers. Lastly our dues and subscriptions increased $84,539, we have implemented a new ERP system that requires a monthly subscription fee, as well as engineering software that is being utilized by Forza. These increases were offset by decreased expenses related to Directors and Officers insurance for Twin Vee of $224,590. The market has improved significantly for this insurance, and we are no longer a brand new publicly traded firm.

 

Salaries and wagewages related expenses increased by 148%approximately 34%, or $4,741,478$1,729,850 to $7,938,954$6,776,941 for the ninesix months ended SeptemberJune 30, 2022 from $3,197,4762023, compared to $5,047,091 for the ninesix months ended SeptemberJune 30, 2021. We have been aggressively working on increasing production,2022. Salaries and this included increasing our production staff as well as adding mid-level staff, resulting in anwages related expenses related to Forza increase of $3,365,308 of additional salaries and wage expense for the nine months ended September 30, 2022 as compared to for the nine months ended September 30, 2021, $698,967 can be directly associated with Forza, for our electric boat and development segment.$1,248,453. Included in salaries and wage related expenses for the ninesix months ended SeptemberJune 30, 20222023 was stock based compensation expense of $814,330 due$972,325, which was an increase of $445,601 compared to the issuancesix months ended June 30, 2022, $682,980 of optionsthe stock based compensation is attributed to employees, $158,705 was directlyForza. Forza now has a board of director and the fees associated with Forza,the board were $51,750 for our electric boat and development segment.the six months ended June 30, 2023, compared to $0, for the six months ended June 30, 2022. We have added a full package of benefits for our employees, in order to retain our quality employees, which resulted in an increase of $315,566.$132,027. The remaining increase ofin salaries and wages related expenses during the ninesix months ended SeptemberJune 30, 20222023 is associated with taxes and benefits.taxes.

 

Research and designdevelopment expenses for Forza, our electric boat and development segment,increased by $567,769, or 143% to $964,121 for the ninesix months ended SeptemberJune 30, 2022, and 2021 were $680,288 and $61,091, respectively.2023, from $396,352 for the six months ended June 30, 2022. Part of the use of proceeds from our IPO, was the development of an electric boat and an electric motor.

 

Professional fees increased by 63%, or $272,741 to $715,022 for the ninesix months ended SeptemberJune 30, 2022 and 2021 were $573,5922023, compared to $217,591, respectively.$438,281 for the six months ended 2022. This increase iswas also due to the expensesadditional costs we incurred fromassociated with Forza being a public company.public. We engaged the services of an outside financial consultant, as well as an audit firm for quarterly reporting and SEC legal counsel in orderand our audit firm to fulfill our public company reporting obligations.

 

Depreciation and amortization expensesexpense increased by 152%, or $302,929 to $502,838 for the ninesix months ended SeptemberJune 30, 2022 and 2021 were $372,511 and $132,089, respectively.2023, compared to $199,909 for the six months ended 2022. This increase is due to the addition of fixed assets, primarily molds, to increase our production levels and throughput.

 

Our other expensesincome increased by 385%, or $324,344$1,891,509 to $240,116$1,681,542 for the ninesix months ended SeptemberJune 30, 2022,2023, compared to other incomean expense of $84,228$209,967 for the ninesix months ended, September 30, 2021. The majority2022. We received $1,267,055 of the increase wasgovernment grant income, due to a net gain from insurance recoveries of $180,124, in 2021, which we did not receive in 2022, an increase in interest expense of $50,966 and our net loss in fair value of marketable securities was $150,569 compared to $10,576 during the nine months ended September 30, 2021. The increase in expenses was also offsetEmployee Retention Credit. Our dividend income increased by an increase of interest income of $63,883, and other income of $32,994.$487,399.


Net Loss

 

Net loss for the ninesix months ended SeptemberJune 30, 202 was $3,732,208, compared to $1,730,099 for the six months ended June 30, 2022, was $2,617,208, compared to $200,477 for the nine months ended September 30, 2021. Forza, which represents ouran increase of $2,002,109. Our electric boat and development segment, which does not generate any revenue, at this time, incurred a loss of $2,156,886,$3,488,786, for the ninesix months ended SeptemberJune 30, 2022,2023, related to research and design.development. Our gas-powered segment incurred a net loss of $393,697, or 1.7% of net sales,$233,841 for the ninesix months ended SeptemberJune 30, 2022. This loss2023, this was due to our aggressive ramp up in production.the addition of the AquaSport facility starting to incur expense but not yet generating revenue. Basic and dilutive loss per share of common stock for the ninesix months ended SeptemberJune 30, 2022,2023 was ($0.37)0.26) compared to ($0.04)0.25) for the ninesix months ended SeptemberJune 30, 2021.2022.

 

Liquidity and Capital Resources

 

TheA primary sourcessource of funds for the nine monthsyear ended SeptemberDecember 31, 2022 and through June 30, 2022 were2023 was net cash from operations and proceedsreceived from our IPO, the Forza IPOsecondary offering, as well as Forza’s initial public and our follow onsecondary offering consummated in October 2022. Forza raised gross proceeds of $17,250,000and revenue generated from the Forza IPO and gross proceeds of $6,875,000 from our follow on offering consummated in October 2022.operations. Our primary use of cash was related to funding the expansion of our operations through capital improvements, adding staff and increasing inventory levels to meet the high level ofincrease in demand coupled with the current supply chain challenges andfor our investment into our electric boat segment.products. With uncertainty on component availability, prolonged lead time and rising prices, we have been bringing inadding to our inventory far earlier than in previous years. With our increased levels of inventory, increased revenues, and increased operating costs, we have also experienced an increase in our accounts payable. Our electric boat segment currently does not generate revenue and incurred a loss of $2,156,886 for the nine months ended September 30, 2022.

To date, Twin Vee has spent approximately $2,500,00 on the funding of the development on our electric boats. The proceeds raised from the initial public offering of the common stock of Forza X1, will be used to build a manufacturing facility, purchase equipment, inventory and working capital.

 

The following table provides selected financial data about us as of SeptemberJune 30, 20222023 and December 31, 2021.2022.

  

 September 30, December 31,     June 30, December 31,    
 2022 2021 Change % Change 2023 2022 Change % Change
Cash and cash equivalents $19,975,562  $6,975,302   13,000,260   186.4%
Marketable securities $2,910,936  $6,064,097   (3,153,161)  (52.0%)
Cash, cash equivalents and restricted cash $26,337,127  $23,501,007  $2,836,120   12.1%
Current assets $26,248,656  $13,073,346   13,175,310   100.8% $33,938,100  $29,887,529  $4,050,571   13.6%
Current liabilities $3,995,584  $2,155,420   1,840,164   85.4% $4,511,968  $3,791,063  $720,905   19.0%
Working capital $22,253,072  $10,917,926   11,335,146   103.8% $29,426,132  $26,096,466  $3,329,666   12.8%

  

As of SeptemberJune 30, 2022,2023, we had sufficient cash and cash equivalents to meet ongoing expenses for at least twelve months from the date of the filing of this Quarterly Report on Form 10-Q. Included in cash and cash equivalents for the three and nine months ended September 30, 2022 is proceeds from the Forza IPO. As of September 30, 2022, we had $22,886,498$26,337,127 of cash, cash equivalents and restricted cash and $1,947,397 of marketable securities, total current assets of $26,248,656,$33,938,100, and total assets of $35,223,690.$45,528,480. Our total liabilities were $5,444,979.$8,391,922. Our total liabilities were comprised of current liabilities of $3,995,584$4,511,968 which included accounts payable and accrued liabilities of $2,465,968, due to affiliated companies of $115,043 and$3,657,890, current portion of operating leaseleases right of use liability of $387,993,$493,056, finance leases liability of $178,687, contract liability of $182,335 and long-term liabilities of $1,449,395.$3,879,954. As of December 31, 2021,2022, we had $13,039,399$26,428,525 of cash, cash equivalents, restricted cash and marketable securities, total current assets of $13,073,346$29,887,529 and total assets of $20,599,184.$38,231,480. Our total current liabilities were $2,155,420$3,791,063 and total liabilities of $3,899,484$5,210,591 which included long-term operating leaseleases liabilities for the lease of our facility.

 

AccumulatedThe accumulated deficit was $4,501,181$9,622,733 as of SeptemberJune 30, 20222023 compared to accumulated deficit of $2,017,556$7,154,808 as of December 31, 2021.2022.


Our working capital increased by $11,335,146$3,329,666 to $22,253,072$29,426,132 as of SeptemberJune 30, 2022,2023, compared to $10,917,926$26,096,466 on December 31, 2021, due primarily2022, this is attributable to the public offering the Forza IPO.completed in June of 2023.

 

We believe that our cash and cash equivalents will provide sufficient resources to finance operations for the next 12 months.months from the date of the filing of this Quarterly Report on Form 10-Q. In addition to cash, cash equivalents and marketable securities, we anticipate that we will be able to rely, in part, on cash flows from operations in order to meet our liquidity and capital expenditure needs in the next yearyear. We do anticipate Forza’s expenses to increase during the next two years as well asit constructs its planned manufacturing facility in McDowell, North Carolina, the cost of which we expect will be paid for through the proceeds from our IPO.of Forza’s public offerings, and certain grant funding, provided the conditions to receipt of the grant funding are met, of which there can be no assurance.

 

Cash Flow

 

  Nine Months Ended    
  September 30,    
  2022 2021 $ Change % Change
Cash used in operating activities $(2,584,381) $(743,435)  (1,840,946)  248%
Cash provided by (used in) investing activities $688,423  $(7,323,287)  8,011,710   (109%)
Cash provided by financing activities $14,896,218  $16,153,814   (1,257,596)  (8%)
Net Change in Cash $13,000,260  $8,087,092   4,913,168   61%

  Years Ended    
  December 31,    
  2021 2020 $ Change % Change
Cash provided by (used in) operating activities $(1,947,539) $364,648   (2,312,187)  (634%)
Cash used in investing activities $(8,037,264) $(200,452)  (7,836,812)  3,910%
Cash provided by financing activities $16,068,289  $512,046   15,556,243   3,038%
Net Change in Cash $6,975,302  $891,816   6,083,486   682%
  Six Months Ended    
  June 30,    
  2023 2022 Change % Change
 Cash used in operating activities $(3,430,097) $(1,196,245) $(2,233,852)  (187%)
 Cash (used in) provided by investing activities $(655,669) $273,105  $(928,774)  (340%)
 Cash provided by (used in) financing activities $6,921,886  $(141,629) $7,063,515   (4,987%)
 Cash, cash equivalents and restricted cash at end of period $26,337,127  $5,910,527  $20,426,594   346%

 

Cash Flow from Operating Activities

 

For the ninesix months ended SeptemberJune 30, 2022,2023, net cash flows used in operating activities was $2,584,381$3,430,097 compared to $743,435$1,196,245 during the ninesix months ended SeptemberJune 30, 2021.2022. We have increased inventory levels by $2,593,469,$1,568,148, due to supply chain delays that continue to impact lead timeopening the AquaSport production facility and parts availability,adding two additional engine suppliers, this is further emphasized by our production ramp up.up, and added models. Accounts receivable increased by $555,966. Accounts payable decreased $726,795.increased $399,720. Our accrued liabilities increased $48,279 and prepaid expenses decreased $81,498, primarily due to accrued rebate being paid out.$427,666. Our net loss from operation was $2,617,208,$3,732,208, was decreased by non-cash expenses of $1,236,831,$1,675,308, primarily due to stock-based compensation of $814,330,$972,325, change of right-of-use asset and leaseleases liabilities of $286,271, loss on disposal of assets of $49,990,$236,712, net change in fair value of marketable securities of $150,569$3,077 and depreciation of $372,511.$502,840.


Cash Flow from Investing Activities

 

During the ninesix months ended SeptemberJune 30, 2022,2023, we provided $688,423used $655,669 in investment activities, compared to $7,323,287 used$273,105 provided by investment activities during the ninesix months ended SeptemberJune 30, 2021.2022. We invested $2,394,169$1,597,208 in the purchase of property and equipment, primarily for new model boat molds of approximately $1,437,000,$379,000, leasehold improvements of approximately $173,000,$90,000, new production equipment of approximately $591,000, and$338,000, new vehicles of approximately $49,000, new computers, software and furniture of approximately $66,000.$156,000, and assets under construction of approximately $585,000. We had proceeds from the sale of propertyinvestments of approximately $80,000,$983,198, and proceeds fromwe paid $15,000 in security deposits for the sale of marketable securities of $3,002,592.new AquaSport facility.

 

Cash Flows from Financing Activities

 

For the ninesix months ended SeptemberJune 30, 2022,2023, net cash provided by financing activities was approximately $14,896,218,$6,921,886 compared to $16,153,814net cash used in financing activities of $141,629 for the ninesix months ended SeptemberJune 30, 2021. 2022. The cash flow from financing activities for the ninesix months ended SeptemberJune 30, 20222023 included net proceeds of $15,231,350$6,996,015 and deferred offering cost of $66,463 from a follow on underwritten public offering in June 2023. Additional cash used for financing activities of $7,666 was due from equipment financing. Cash used in financing for the Forza IPO.six months ended June 30,2022, was $141,629 for deferred offering costs.

 

CRITICAL ACCOUNTING ESTIMATES

 

We believe that several accounting policies are important to understanding our historical and future performance. We refer to these policies as “critical” because these specific areas generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different estimates—which also would have been reasonable—could have been used, which would have resulted in different financial results.

 

Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and make various assumptions, which management believes to be reasonable under the circumstances, which form the basis for judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

 

The notes to our condensed consolidated financial statements contained herein contain a summary of our significant accounting policies. We consider the following accounting policies critical to the understanding of the results of our operations:

 

Revenue Recognition

We accountThe Company’s revenue is derived primarily from the sale of boats, motors and trailers to its independent dealers. The Company recognizes revenue when obligations under the terms of a contract are satisfied and control over promised goods is transferred to the dealer. For the majority of sales, this occurs when the product is released to the carrier responsible for transporting it to a dealer. The Company typically receives payment within five business days of shipment. Revenue is measured as the amount of consideration it expects to receive in exchange for a product. The Company offers dealer incentives that include wholesale rebates, retail rebates and promotions, floor plan reimbursement or cash discounts, and other allowances that are recorded as reductions of revenues in net sales in the statements of operations. The consideration recognized represents the amount specified in a contract with a customer, net of estimated incentives the Company reasonably expects to pay. The estimated liability and reduction in revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 which was adoptedfor dealer incentives is recorded at the beginningtime of fiscal year 2018 usingsale. Subsequent adjustments to incentive estimates are possible because actual results may differ from these estimates if conditions dictate the modified retrospective method. We did not recognize any cumulative-effect adjustmentneed to retained earnings upon adoption asenhance or reduce sales promotion and incentive programs or if dealer achievement or other items vary from historical trends. Accrued dealer incentives are included in accrued liabilities in the effect was immaterial.accompanying consolidated balance sheets.

 

Payment received for the future sale of a boat to a customer is recognized as a customer deposit, which is included in contract liabilities on the balance sheet.deposit. Customer deposits are recognized as revenue when control over promised goods is transferred to the customer.

 

Use of Estimates

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States “U.S. GAAP” requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results could differ from those estimates. Included in those estimates are assumptions about allowances for inventory obsolescence, useful life of fixed assets, warranty reserves and bad-debt reserves.


Inventories

 

Inventories are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) method. Net realizable value is defined as sales price less cost of completion, disposable and transportation and a normal profit margin. Production costs, consisting of labor and overhead, are applied to ending finished goods inventories at a rate based on estimated production capacity. Excess production costs are charged to cost of products sold. Provisions have beenare made when necessary to reduce excess or obsolete inventories to their net realizable value.

 

 Impairment of Long-Lived Assets

 

Management assesses the recoverability of its long-lived assets when indicators of impairment are present. If such indicators are present, recoverability of these assets is determined by comparing the undiscounted net cash flows estimated to result from those assets over the remaining life to the assets’ net carrying amounts. If the estimated undiscounted net cash flows are less than the net carrying amount, the assets would be adjusted to their fair value, based on appraisal or the present value of the undiscounted net cash flows.

 

Product Warranty Costs

 

As required by FASB ASC Topic 460, Guarantees, we are including the following disclosure applicable to our product warranties.

 

We accrue for warranty costs based on the expected material and labor costs to provide warranty replacement products. The methodology used in determining the liability for warranty cost is based upon historical information and experience. Our warranty reserve is calculated as the gross sales multiplied by the historical warranty expense return rate.

 

Leases

 

We adopted FASB Accounting Standards Update (“ASU”) No. 2016-02, Leases (“Topic 842”), using the modified retrospective adoption method with an effective date of January 1, 2019. This standard requires all lessees to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments.

 

Under Topic 842, we applied a dual approach to all leases whereby we are a lessee and classify leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by us. Lease classification is evaluated at the inception of the lease agreement.

 

Paycheck Protection Program

U.S. GAAP does not contain authoritative accounting standards for forgivable loans provided by governmental entities to a for-profit entity. Absent authoritative accounting standards, interpretative guidance issued and commonly applied by financial statement preparers allows for the selection of accounting policies amongst acceptable alternatives. Based on the facts and circumstances, we determined it most appropriate to account for the Paycheck Protection Program (“PPP”) loan proceeds as an in-substance government grant by analogy to International Accounting Standards 20 “(IAS 20)”, Accounting for Government Grants and Disclosure of Government Assistance. Under the provisions of IAS 20, “a forgivable loan from government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan.” IAS 20 does not define “reasonable assurance”; however, based on certain interpretations, it is analogous to “probable” as defined in FASB ASC Subtopic 450-20-20 under U.S. GAAP, which is the definition we have applied to our expectations of PPP loan forgiveness. Under IAS 20, government grants are recognized in earnings on a systematic basis over the periods in which we recognize costs for which the grant is intended to compensate (i.e., qualified expenses). Further, IAS 20 permits for the recognition in earnings either (1) separately under a general heading such as other income, or (2) as a reduction of the related expenses. We have elected to recognize government grant income separately within other income to present a clearer distinction in its financial statements between its operating income and the amount of net income resulting from the PPP loan and forgiveness.


Deferred Income Taxes and Valuation Allowance

 

We account for income taxes under ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that we will not realize tax assets through future operations.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under Securities and Exchange CommissionSEC rules.

 

ITEM 3. 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 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of SeptemberJune 30, 2022.2023. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e)13a-15I and 15d-15(e)15d-15I under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. We have adopted and maintain disclosure controls and procedures (as defined Rules 13a-15(e)13a-15I and 15d-15(e)15d-15I under the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in the reports filed under the Exchange Act, such as this Quarterly Report on Form 10-Q, is collected, recorded, processed, summarized, and reported within the time periods specified in the rules of the SEC. Our disclosure controls and procedures are also designed to ensure that such information is accumulated and communicated to management to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of SeptemberJune 30, 2022,2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of such a date, our disclosure controls and procedures were not effective due to the material weaknesses in our internal control over financial reporting, related to not yet having retained sufficient staff or engaged sufficient outside consultants with appropriate experience in GAAP presentation, especially of complex instruments, to devise and implement effective disclosure controls and procedures over internal controls.instruments.

 

Remediation Plan

 

Management has developed and is executing a remediation plan to address the previously disclosed material weaknesses, due to inadequate staffing levels. We have retained a full-time Controller and a Staff Accountant; we have selected and are working on implementinghave recently implemented a robust operating system, and we are utilizing the assistance of outside advisors where appropriate.


To remediate the existing material weaknesses, additional time is required to demonstrate the effectiveness of the remediation efforts. The material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. As of SeptemberJune 30, 2022,2023, controls and procedureprocedures have been implemented to remediate the material weakness, however testing of controls continues.

 

Changes in Internal Control over Financial Reporting

 

During the ninesix months ended SeptemberJune 30, 2022,2023, we hired additionalreplacement staff in our finance department and have developedare developing and refinedrefining our controls and other producers that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC are recorded, processed, summarized and reported within the time periods specified in SEC rules and in accordance with GAAP.

 

PART II—OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

 

ITEM 1A. RISK FACTORS.

 

Investing in our securities involves a high degree of risk. You should consider carefully the following risks, together with all the other information in this Quarterly Report on Form 10-Q, including our condensed consolidated financial statements and notes thereto. If any of the following risks actually materializes, our operating results, financial condition and liquidity could be materially adversely affected. The following information updates, and should be read in conjunction with, the information disclosed in Part I, Item 1A, “”Risk Factors,” contained in our Annual Report on Form 10-K for the year ended December 31, 2021.2022. Except as disclosed below, there have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.2022.

 

We have incurred losses for the quarter ended June 30, 2023 and the year ended December 31, 2022 and could continue to incur losses in the future.

For the year ended December 31, 2022, we incurred a loss from operations of $6,021,707 and a net loss of $5,793,414. For the six months ended June 30, 2023, we incurred a loss from operations of $5,380,260 and a net loss of $3,698,718. As of June 30, 2023, we had an accumulated deficit of approximately $9.7 million. There can be no assurance that expenses will not continue to increase in future periods or that the cash generated from operations in future periods will be sufficient to satisfy our operating needs and to generate income from operations and net income.

The capacity of the manufacturing facility that we and Forza utilize will not be sufficient to support our future growth and business plans.

We are currently operating close to full capacity at our current manufacturing facility in Fort Pierce. Forza plans to manufacture its electric boats at a new state of the art carbon neutral factory that it plans to build in McDowell County, North Carolina. Until we are able to expand our manufacturing capacity and Forza is able to build the planned manufacturing facility, we will continue to share our current manufacturing facility with Forza, which has a limited capacity and may not be able to satisfy our and their manufacturing needs. Any facility that we build will require a significant capital investment and is expected to take at least one to two years to build and become fully operational. As a result of limited capacity at our facility, Forza’s ability to produce any boats will be limited to the available capacity of our facility until Forza’s future manufacturing facility is operational. If capacity is not available, Forza will not be able to produce its electric boats as planned. 

34

 In addition. Forza intends to utilize grant funding to pay for certain costs associated with the building of its manufacturing facility. On July 28, 2022, we received notice that the North Carolina Economic investment committee has approved a Job Development Investment Grant (“JDIG”) providing for reimbursement to us of up to $1,367,100 over a twelve-year period to establish a new manufacturing plant in McDowell County, North Carolina. The receipt of grant funding is conditioned upon Forza investing over $10.5 million in land, buildings and fixtures, infrastructure and machinery and equipment by the end of 2025 and Forza creating as many as 170 jobs. There can be no assurance that Forza will meet the conditions necessary to receive the grant funding.

Changes in general economic conditions, geopolitical conditions, domestic and foreign trade policies, monetary policies and other factors beyond our control may adversely impact our business and operating results.

 

Our operations and performance depend on global, regional and U.S. economic and geopolitical conditions. Increasing inflation has raised operating costs for many businessesGeneral worldwide economic conditions have experienced significant instability in recent years including the recent global economic uncertainty and in the future, could impact demand or pricing of our boats or employee wages.financial market conditions. Russia’s invasion and military attacks on Ukraine have triggered significant sanctions from U.S. and European leaders. These events are currently escalatingleaders and creating increasingly volatile global economic conditions.financial markets around the world experienced volatility following the invasion of Ukraine by Russia in February 2022. Resulting changes in U.S. trade policy could trigger retaliatory actions by Russia, its allies and other affected countries, including China, resulting in a “trade war.” Furthermore, if the conflict between Russia and Ukraine continues for a long period of time, or if other countries, including the U.S., become further involved in the conflict, we could face significant adverse effects to our business and financial condition.

 

The above factors, including a number of other economicuncertain financial markets, disruptions in supply chains, mobility restraints, and geopolitical factors bothchanging priorities as well as volatile asset values could impact our business in the U.S.future. The COVID-19 outbreak and abroad, could ultimatelygovernment measures taken in response to the pandemic have material adversealso had a significant impact, both direct and indirect, on businesses and commerce, as worker shortages have occurred; supply chains have been disrupted; facilities and production have been suspended; and demand for certain goods and services, such as medical services and supplies, have spiked, while demand for other goods and services, such as travel, have fallen. The future progression of the pandemic and its effects on our business and operations are uncertain. In addition, the outbreak of a pandemic could disrupt our operations due to absenteeism by infected or ill members of management or other employees, or absenteeism by members of management and other employees who elect not to come to work due to the illness affecting others in our office or laboratory facilities, or due to quarantines. Pandemics could also impact members of our Board of Directors resulting in absenteeism from meetings of the directors or committees of directors, and making it more difficult to convene the quorums of the full Board of Directors or its committees needed to conduct meetings for the management of our affairs.

Further, due to increasing inflation, operating costs for many businesses including ours have increased and, in the future, could impact demand or pricing manufacturing of our drug candidates or services providers, foreign exchange rates or employee wages. Inflation rates, particularly in the United States, have increased recently to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital. In addition, the Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial condition, resultsmarkets may have the effect of operationsfurther increasing economic uncertainty and heightening these risks.

Actual events involving reduced or limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation as receiver. Although we did not have any cash or cash flows, includingequivalent balances on deposit with Silicon Valley Bank, uncertainty and liquidity concerns in the following:broader financial services industry remain and the failure of Silicon Valley Bank and its potential near- and long-term effects on the biotechnology industry and its participants such as our vendors, suppliers, and investors, may also adversely affect our operations and stock price.

 

●effects of significant changes in economic, monetary and fiscal policies in the U.S. and abroad including currency fluctuations, inflationary pressures and significant income tax changes;

We are actively monitoring the effects these disruptions and increasing inflation could have on our operations.

 

●a global or regional economic slowdown in any of our market segments;

These conditions make it extremely difficult for us to accurately forecast and plan future business activities.

●changes in government policies and regulations affecting the Company or its significant customers;

●industrial policies in various countries that favor domestic industries over multinationals or that restrict foreign companies altogether;

●new or stricter trade policies and tariffs enacted by countries, such as China, in response to changes in U.S. trade policies and tariffs;

●postponement of spending, in response to tighter credit, financial market volatility and other factors;

●rapid material escalation of the cost of regulatory compliance and litigation;

●difficulties protecting intellectual property;

●longer payment cycles;

●credit risks and other challenges in collecting accounts receivable; and

●the impact of each of the foregoing on outsourcing and procurement arrangements.

 

We depend on our network of independent dealers for our gas-powered boats, face increasing competition for dealers, and have little control over their activities.

 

A significant portion of our sales of our gas-powered boats are derived from our network of independent dealers. We typically manufacture our gas-powered boats based upon indications of interest received from dealers who are not contractually obligated to purchase any boats. While our dealers typically have purchased all of the boats for which they have provided us with indications of interest, it is possible that a dealer could choose not to purchase boats for which it has provided an indication of interest (e.g., if it were to have reached the credit limit on its floor plan), and as a result we once experienced, and in the future could experience, excess inventory and costs. At SeptemberFor the six months ended June 30, 2022,2023, our top three dealers accounted for 37%approximately 36% of our consolidated revenues. During the six months ended June 30, 2023, one individual dealer had sales of over 10% of our total boats sold.sales, that dealer represented 20% of total sales. The loss of a significant dealer could have a material adverse effect on our financial condition and results of operations. The number of dealers supporting our products and the quality of their marketing and servicing efforts are essential to our ability to generate sales. Competition for dealers among other boat manufacturers continues to increase based on the quality, price, value, and availability of the manufacturers’ products, the manufacturers’ attention to customer service, and the marketing support that the manufacturer provides to the dealers. We face intense competition from other boat manufacturers in attracting and retaining dealers, affecting our ability to attract or retain relationships with qualified and successful dealers. Although our management believes that the quality of our products in the performance sport boat industry should permit us to maintain our relationships with our dealers and our market share position, there can be no assurance that we will be able to maintain or improve our relationships with our dealers or our market share position. In addition, independent dealers in the boating industry have experienced significant consolidation in recent years, which could result in the loss of one or more of our dealers in the future if the surviving entity in any such consolidation purchases similar products from a competitor. A substantial deterioration in the number of dealers or the quality of our network of dealers would have a material adverse effect on our business, financial condition, and results of operations.

 

Our success depends, in part, upon the financial healthThe loss of ourone or a few dealers and their continued access to financing.could have a material adverse effect on us.

 

Because we sell nearly allA few dealers have in the past, and may in the future, account for a significant portion of our gas-poweredrevenues in any one year or over a period of several consecutive years. For example, during the six months ended June 30, 2023, one individual dealers had sales of over 10% of our total sales, and that dealers represented 20% of total sales. During the six months ended June 30, 2022, three dealers represented 36% of our sales. The loss of business from a significant dealer could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Forza’s planned fully electric sport boat has not yet been developed, and even if developed, interest in it may not develop.

Forza has completed the design and is testing it first monohull sport boat. There can be no assurance that Forza will be able to complete testing of their product when anticipated, if at all, that we will be able to mass produce the electric boats or that the anticipated features or services to be included in the electric boat will create substantial interest or a market, and therefore Forza’s anticipated product, its sales and growth for our product may not develop as expected, or at all. For example, in May 2021 we experienced a small fire in connection with the sea trial of a prototype of our electric boat which resulted in a six-month delay in our design timetable as we implemented changes to the design for outboard electric motor system as a result of the fire. We cannot guarantee that similar events will not occur in the future, or that we will be able to contain such events without damage or delay. Even if such a market for the electric sport boat develops, there can be no assurance that Forza would be able to maintain that market.

Forza’s operations to date have been primarily limited to finalizing the design and engineering of its electric sport boat as well as organizing and staffing Forza in preparation for launching the electric boat. As such, Forza has not yet demonstrated, and the success of Forza is wholly dependent upon, its ability to commercialize its products. The successful commercialization of any products through dealers, their financial health is criticalwill require us to perform a variety of functions, including:

●completing the design and testing for the electric sport boat and Forza’s proprietary outboard electric motor;
●manufacturing the electric sport boats;
●developing a vertically integrated direct-to-consumer distribution system; and
●conducting sales and marketing activities.

Forza cannot be certain that its business strategy for its electric-powered boats will be successful or that we will successfully address these risks. In the event that we do not successfully address these risks, our success. Our business, prospects, financial condition, and results of operations maycould be materially and adversely affected, if the financial health of the dealers that sell our products suffers. Their financial health may suffer for a variety of reasons, including a downturn in general economic conditions, rising interest rates, higher rents, increased labor costs and taxes, compliance with regulations, and personal financial issues. In addition, the more inventory of our boats that any dealer acquires, the greater the risk that the dealer is affected by the foregoing. During the nine months ended September 30, 2022, the dealers have significantly increased their inventory of our boats.

In addition, our dealers require adequate liquidity to finance their operations, including purchases of our products. Dealers are subject to numerous risks and uncertainties that could unfavorably affect their liquidity positions, including, among other things, continued access to adequate financing sources on a timely basis on reasonable terms. These sources of financing are vital to our ability to sell products through our distribution network. Access to financing generally facilitates our dealers’ ability to purchase boats from us, and their financed purchases reduce our working capital requirements. If financing were not available to our dealers, our sales and our working capital levels would be adversely affected.


We may be required to repurchase inventory of certain dealers.

Many of our dealers have floor plan financing arrangements with third-party finance companies that enable the dealers to purchase our products. In connection with these agreements, we may have an obligation to repurchase our products from a finance company under certain circumstances, and weForza may not have any control over the timingresources to continue or amountexpand the business operations of any repurchase obligation nor have access to capital on terms acceptableits electric-powered boats business.

Forza may not receive the anticipated grant funding.

On July 28, 2022, Forza received notice that the North Carolina Economic investment committee has approved the JDIG providing for reimbursement to us of up to satisfy any repurchase obligation. This obligation$1,367,100 over a twelve-year period to establish a new manufacturing plant in McDowell County, North Carolina. The receipt of grant funding is triggered ifconditioned upon us investing over $10.5 million in land, buildings and fixtures, infrastructure and machinery and equipment by the end of 2025 and us creating as many as 170 jobs. Forza is currently in negotiations for a dealer defaults on its debt obligationsnew site to a finance company,build the finance company repossesses the boat, and the boat is returned to us. Our obligation to repurchase a repossessed boat for the unpaid balance of our original invoice price for the boat is subject to reduction or limitation based on the age and condition of the boat at the time of repurchase, andForza factory in certain cases by an aggregate cap on repurchase obligations associated with a particular floor plan financing program. To date, we have not been obligated to repurchase any boats under our dealers’ floor plan financing arrangements, and we are not aware of any applicable laws regulating dealer relations which govern our relations with the dealers or would require us to repurchase any boats. However, there isNorth Carolina. There can be no assurance that a dealerthe negotiations will be successful. If unsuccessful, it will not default onmeet the terms ofconditions necessary to receive the grant funding and will be subject to the limited capacity at the Twin Vee factory that Twin Vee allows Forza, in its discretion, to use. There can be no assurance that Forza will meet the conditions necessary to receive the grant funding. Forza is currently in negotiations for a credit linenew site to build the Forza factory in North Carolina. There can be no assurance that the future. The risk that a dealer may default, and we maynegotiations will be required to repurchase a vehicle increases as dealers acquire more inventory of our boats. Our maximum obligation under such floor plan agreements totaled approximately $11,825,000 or 68 units, and $4,273,000 or 24 units, as of September 30, 2022, and December 31, 2021, respectively. In addition, applicable laws regulating dealer relations may also require us to repurchase our products from our dealers under certain circumstances, and we may not have any control over the timing or amount of any repurchase obligation nor have access to capital on terms acceptable to us to satisfy any repurchase obligation. If we were obligated to repurchase a significant number of units under any repurchase agreement or under applicable dealer laws, our business, operating results and financial condition could be adversely affected.successful.

 

We have identified weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future.

 

As a public company, we will be subject to the reporting requirements of the Exchange Act, and the Sarbanes-Oxley Act. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources.

 

The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures, and internal control over financial reporting.

 

WeAs of June 30, 2023, we do not yet have effective disclosure controls and procedures, or internal controls over all aspects of our financial reporting .reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and in accordance with GAAP. Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. We have addedwill be required to expend time and resources to further improve our staffing levels and implemented additional control. In early 2023 we will have a new operating system in place that will further strengthen theinternal controls over financial reporting, process.including by expanding our staff. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future.

We will be required to expend time and resources to further improve our internal controls over financial reporting, including by expanding our staff. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future.

We are in the process of hiring additional staff and providing them with the required training, we continue to engage outside consultants with appropriate experience in GAAP presentation, especially of complex instruments, to devise and implement effective disclosure controls and procedures, or internal controls. We will be required to spend time and resources hiring and engaging additional staff and outside consultants with the appropriate experience to remedy these weaknesses. We cannot assure you that management will be successful in locating and retaining appropriate candidates; that newly engaged staff or outside consultants will be successful in remedying material weaknesses thus far identified or identifying material weaknesses in the future; or that appropriate candidates will be located and retained prior to these deficiencies resulting in material and adverse effects on our business.

 

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business, including increased complexity resulting from our international expansion. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting could also adversely affect the results of management reports and independent registered public accounting firm audits of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures, and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the market price of our common stock.


Our independent registered public accounting firm is not required to audit the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results and cause a decline in the market price of our common stock.

Forza X1 may not receive the anticipated grant funding.

On July 28, 2022, Forza received notice that the North Carolina Economic Investment Committee has approved a Job Development Investment Grant (“JDIG”) providing for reimbursement to it of up to $1,367,100 over a twelve-year period to establish a new manufacturing plant in McDowell County, North Carolina. The receipt of grant funding is conditioned upon Forza investing over $10.5 million in land, buildings and fixtures, infrastructure and machinery and equipment by the end of 2025 and us creating as many as 170 jobs. Forza is currently in negotiations for a new site to build the Forza factory in North Carolina. There can be no assurance that the negotiations will be successful. If unsuccessful, Forza will not meet the conditions necessary to receive the grant funding and will be subject to the limited capacity at our factory that we allow Forza, in our discretion, to use. There can be no assurance that Forza X1 will meet the conditions necessary to receive the grant funding.

Our planned fully electric sport boat has not yet been developed, and even if developed, interest in it may not develop.

Forza’s electric boats are being designed as fully integrated electric boats, including the hull, outboard motor and control system; however, Forza has not completed the final assembly of its electric boat into a fully integrated product. There can be no assurance that Forza will be able to complete development of the FX1 when anticipated, if at all, that Forza will be able to mass produce the FX1 or that the anticipated features or services to be included in the FX1 will create substantial interest or a market, and therefore our anticipated FX1 product, its sales and growth for our product may not develop as expected, or at all. For example, in May 2021 we experienced a small fire in connection with the sea trial of a prototype of our electric boat which resulted in a six-month delay in our design timetable as we implemented changes to the design for outboard electric motor system as a result of the fire. We cannot guarantee that similar events will not occur in the future, or that we will be able to contain such events without damage or delay. Even if such a market for the FX1 sport boat develops, there can be no assurance that we would be able to maintain that market.

Forza’s operations to date have been primarily limited to finalizing the design and engineering of our electric sport boat as well as organizing and staffing Forza in preparation for launching the FX1 electric boat. As such, we have not yet demonstrated, and the success of Forza is wholly dependent upon, its ability to commercialize its products. The successful commercialization of any products will require us to perform a variety of functions, including:

●completing the design and testing for the FX1 sport boat and our proprietary outboard electric motor;
●manufacturing the FX1 sport boats;
●developing a vertically integrated direct-to-consumer distribution system; and
●conducting sales and marketing activities.

We cannot be certain that our business strategy for our electric-powered boats will be successful or that we will successfully address these risks. In the event that we do not successfully address these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected, and we may not have the resources to continue or expand the business operations of our electric-powered boats business.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

(a)Unregistered Sales of Equity Securities.

None.

 

(b)Use of Proceeds.

On July 22,23, 2021, we closed our initial public offering pursuant to which we offered and sold 3,000,000 shares of our common stock at an offering price of $6.00 per share (for aggregate gross proceeds of $18,000,000), pursuant to our Registration Statement on Form S-1 (as amended) (File No. 333-255134), which was declared effective by the SEC on July 20, 2021, as amended by the Registration Statement on Form S-1 MEF (File No. 333-258058) filed with the SEC on July 20, 2021 and effective as of the date of filing. After deducting underwriting discounts and commissions of approximately $1,260,000, and other offering expenses payable by us of approximately $1,567,150, we received approximately $15,849,037 in net proceeds from our initial public offering. ThinkEquity LLC (formerly known as ThinkEquity, a division of Fordham Financial Management, Inc.) acted as the representative of the several underwriters for the offering. We also granted a 45-day option to the representative of the underwriters to purchase up to 450,000 additional shares of common stock solely to cover over-allotments, if any, which expired unexercised.

 

At the time of the initial public offering, the primary use of the net proceeds was as follows: (i) approximately $1,500,000 for production and marketing of our larger fully equipped boats.;boats; (ii) approximately $2,500,000 for the design, development, testing, manufacturing and marketing of our new line of electric boats; (iii) approximately $6,000,000 for the design, development, testing, manufacturing and marketing of our fully electric propulsion system; (iv) approximately $3,500,000 for acquisition of waterfront property and development of the Electra Power Sports- EV Innovation & Testing Center, in Fort Pierce, Florida to build, design and manufacture our electric propulsion systemssystems; and (v) the balance for working capital.

 

It was originally anticipated that we would retrofit a gas-powered boat with an electric motor that would be designed by us and that we would also sell the motors to other third-party boat manufacturers to retrofit their boats. The retrofitting would require extensive development, testing and manufacturing of multiple variations of electric motors. However, consumer preference in the electric marine market was and is trending towards a single purchase of a fully integrated electric boat rather than a retrofitted existing gas and diesel fuel powered boat with electric outboard motors and battery packs. Therefore, we decided not to continue designing electric motors for retrofitting, resulting in us no longer needing any funding for the design, development, testing, manufacturing and marketing of our fully electric propulsion system and instead those funds are anticipated to be used for working capital needs.

Further, we originally anticipated that we would acquire waterfront property for a testing center in Fort Pierce, the price of real estate in Florida has prohibited us from moving forward. Therefore, we decided to use the $3,500,000 of funds to build additional manufacturing space at our Fort Pierce location.

The remaining planned use of proceeds has not changed since the initial public offering.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

Not Applicable.

 

ITEM 4. MINE SAFETY DISCLOSURES.

 

Not Applicable.

 

ITEM 5. OTHER INFORMATION.

 

None.

 

ITEM 6. EXHIBITS.

 

The exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index. The Exhibit Index is incorporated herein by reference.


EXHIBIT INDEX

 

Exhibit No.Description
1.12.1 Underwriting Agreement and Plan of Merger, dated August 11,September 8, 2022, by and between Forza X1,Twin Vee PowerCats Co. and Twin Vee PowerCats, Inc. and ThinkEquity LLC (incorporated(Incorporated by reference to Current Report onthe Exhibit 2.1 to the Company’s Form 8-K, File No. 001-40623, filed with the Securities and Exchange Commission on August 17, 2022 (FileSeptember 9, 2022) 
2.2 Form of Support Agreement, by and between Twin Vee PowerCats Co. and Twin Vee PowerCats, Inc.’s directors, officers and certain stockholders (Incorporated by reference to the Exhibit 2.2 to the Company’s Form 8-K, File No. 001-40623))001-40623, filed with the Securities and Exchange Commission on September 9, 2022) 
3.1Articles of Incorporation filed with the Secretary of State of the State of Florida, dated December 1, 2009 (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.2Articles of Amendment to the Articles of Incorporation, filed with the Secretary of State of the State of Florida on January 22, 2016 (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.3Articles of Amendment to the Articles of Incorporation, filed with the Secretary of State of the State of Florida on April 12, 2016 (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.4Article of Conversion filed with the Secretary of State of the State of Florida, dated April 7, 2021 (incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.5Certificate of Conversion filed with the Secretary of State of the State of Delaware on April 7, 2021 (incorporated by reference to Exhibit 3.5 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.6Certificate of Incorporation filed with the Secretary of State of the State of Delaware on April 7, 2021 (incorporated by reference to Exhibit 3.6 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
3.7Bylaws (incorporated by reference to Exhibit 3.7 to the Registration Statement on Form S-1 with the Securities and Exchange Commission on April 8, 2021 (File No. 333-255134))
10.1Form of IndemnificationCommercial Lease Agreement (incorporated by reference(with Option to Exhibit 10.1 to Current Report Form 8-K filed with the Securities and Exchange Commission on August 17, 2022 (File No. 001-40623))
10.2Transition Services Agreement,Purchase), dated August 16, 2022,May 5, 2023, by and between, Forza X1, Inc.AquaSport Co., Ebbtide Corporation and Twin Vee PowerCats Co. (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2022 (File No. 001-40623))
10.3Forza X1, Inc. 2022 Stock Incentive Plan and form of Incentive Plan Option Agreement, Non-Qualified Stock Option Agreement, and Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2022 (File No. 001-40623))
10.4Employment Agreement, dated August 16, 2022, by and between Forza X1, Inc. and Joseph C. Visconti (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K filed with the Securities and Exchange Commission on August 17, 2022 (File No. 001-40623))
10.5Amendment, dated August 22, 2022, to Employment Agreement, dated October 1, 2021, by and between Twin Vee PowerCats Co. and Carrie Gunnerson (incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on August 22, 2022 (File No. 001-40623))
10.6Form of Support Agreement, by and between Twin Vee PowerCats Co. and Twin Vee Powercats, Inc.’s directors, officers and certain stockholders (incorporated by reference to Exhibit 2.2 to Current Report on Form 8-K filed with the Securities and Exchange Commission on SeptemberMay 9, 2022 (File No. 001-40623))
10.7Amendment to Employment Agreement between Twin Vee PowerCats Co. and Joseph Visconti, effective as of October 20, 2022(incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on October 21, 20222023 (File No. 001-40623))
31.1*Certification by principal executive officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*Certification by principal financial officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*Certification by 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*Certification by principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*InlineXBRL Instance Document
101.SCH*InlineXBRL Taxonomy Extension Schema Document
101.CAL*InlineXBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*InlineXBRL Taxonomy Extension Definition Linkbase Document
101.LAB*InlineXBRL Taxonomy Extension Label Linkbase Document
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)

 

*Filed herewith.

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.

 

TWIN VEE POWERCATS CO.
Date: November 8, 2022August 14, 2023By: /s/ Joseph C. Visconti
Joseph C. Visconti
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: November 8, 2022August 14, 2023By:/s/ Carrie Gunnerson
Carrie Gunnerson
Chief Financial Officer
(Principal Financial and Accounting Officer)

 

3541