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What changed in Twin Vee PowerCats, Co.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Twin Vee PowerCats, Co.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+359 added−373 removedSource: 10-K (2024-03-27) vs 10-K (2023-03-30)

Top changes in Twin Vee PowerCats, Co.'s 2023 10-K

359 paragraphs added · 373 removed · 256 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

89 edited+24 added−44 removed114 unchanged
Biggest changeWe believe the Twin Vee brand is well-known among boating enthusiasts for performance, quality, and value, and that the market recognizes Twin Vee as a brand in the twin hull sport boat category due to the value proposition that our boats deliver. Diverse Product Offering . We are able to attract consumers across multiple categories within the recreational powerboat industry.
Biggest changeOur Strengths and Competitive Advantages We believe that the following are the key investment attributes of our company: Recognized Brand. We believe the Twin Vee and AquaSport brands are well-known among boating enthusiasts for performance, quality, and value, and that the market recognizes both Twin Vee and AquaSport as brands that deliver a proposition. Diverse Product Offering .
By operating its sales and service network, its believes it can offer a compelling and premium customer-centric experience while achieving operating efficiencies and capturing sales and service revenues that traditional boat manufacturers do not receive in the independent dealer model.
By operating its sales and service network, it believes it can offer a compelling and premium customer-centric experience while achieving operating efficiencies and capturing sales and service revenues that traditional boat manufacturers do not receive in the independent dealer model.
There are no spark plugs or engine motor oil to change or worry about. Additionally, remote diagnostics will allow Forza to find issues with customer boats remotely, in real time. In many cases, Forza’s service team will be able to provide an OTA update to resolve the issue without the customer’s boat ever leaving the customer’s sight.
There are no spark plugs or engine motor oil to change or worry about. 12 Additionally, remote diagnostics will allow Forza to find issues with customer boats remotely, in real time. In many cases, Forza’s service team will be able to provide an OTA update to resolve the issue without the customer’s boat ever leaving the customer’s sight.
The scheduling, communication, and support necessary for coordinating touchless delivery of Forza boats would all be accomplished over the website or app. ● Servicing . Forza intends to offer highly tailored and differentiated services that enable intuitive experiences throughout the entire customer lifecycle, such as warranty, repair, or other service assistance for their boats.
The scheduling, communication, and support necessary for coordinating touchless delivery of our Forza boats would all be accomplished over the website or app. ● Servicing . Forza intends to offer highly tailored and differentiated services that enable intuitive experiences throughout the entire customer lifecycle, such as warranty, repair, or other service assistance for their boats.
Our greatest hope is to be purposeful stewards of the marine industry and lead by example in environmentally friendly innovation. ● Noise Level . So often, powerboats create large amounts of noise, disturbing wildlife and making it difficult for fellow passengers to hear one another while underway.
Our greatest hope is to be purposeful stewards of the marine industry and lead by example in environmentally friendly innovation. 16 ● Noise Level . So often, powerboats create large amounts of noise, disturbing wildlife and making it difficult for fellow passengers to hear one another while underway.
To date, we have not been required to repurchase any boats under repurchase agreements. Competition The powerboat industry, including the performance sport boat category, is highly competitive for consumers and dealers. Competition affects our ability to succeed in the markets we currently serve and new markets that we may enter in the future.
To date, we have not been required to repurchase any boats under repurchase agreements. 17 Competition The powerboat industry, including the performance sport boat category, is highly competitive for consumers and dealers. Competition affects our ability to succeed in the markets we currently serve and new markets that we may enter in the future.
We are also developing new product offerings that will specifically target certain product demand from our international consumers and that we believe will drive further sales growth in international markets. 10 EV/Forza Specific Strategy Forza plans to market and sell its model offerings in a variety of ways.
We are also developing new product offerings that will specifically target certain product demand from our international consumers and that we believe will drive further sales growth in international markets. EV/Forza Specific Strategy Forza plans to market and sell its model offerings in a variety of ways.
Once approved, the work is completed on the covered warrantable repairs, and Forza will pay the marine service center directly. 12 There may be instances where the customer’s issue is too technical for a traditional marine service center (e.g., issues related to the EV components of the boat).
Once approved, the work is completed on the covered warrantable repairs, and Forza will pay the marine service center directly. There may be instances where the customer’s issue is too technical for a traditional marine service center (e.g., issues related to the EV components of the boat).
Specifically, hydrocarbons, similar to the dirt that clings to the walls of a bathtub, contaminate the shores and banks of lakes, rivers and bodies of water, where the development of many living organisms takes place. The ecosystem is then modified with the scarcity or disappearance of certain species.
Specifically, hydrocarbons, 15 similar to the dirt that clings to the walls of a bathtub, contaminate the shores and banks of lakes, rivers and bodies of water, where the development of many living organisms takes place. The ecosystem is then modified with the scarcity or disappearance of certain species.
FX1’s electric powertrain will produce little to no sound, making it easier to enjoy the sounds of nature, family, and friends. Forza’s products will also help tremendously with fishing and other sporting and water-based activities that favor less noise.
Forza’s electric powertrain will produce little to no sound, making it easier to enjoy the sounds of nature, family, and friends. Forza’s products will also help tremendously with fishing and other sporting and water-based activities that favor less noise.
With the extra separation between the motors, over most mono hull boats, you can cross-clutch the motors and turn or spin the boat up to its own length. ● Maintains a plane at lower speed for fuel efficiency .
With the extra separation between the motors, over most mono hull boats, you can cross-clutch the motors and turn or spin the boat up to its own length. 8 ● Maintains a plane at lower speed for fuel efficiency .
If over-the-air updates to software or hardware are insufficient to solve the problems and FX1 customer experience and service center or mobile service van are not within range of the customer, its support and service department will provide assistance.
If over-the-air updates to software or hardware are insufficient to solve the problems and customer experience and service center or mobile service van are not within range of the customer, its support and service department will provide assistance.
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 currently employ approximately 170 people.
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 currently employ approximately 80 people.
Specifically: ● we provide employee wages and benefits that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location; ● we align our executives’ long-term equity compensation with our shareholders’ interests by linking realizable pay with stock performance; and ● all employees are eligible for health insurance, paid and unpaid leaves, a retirement plan and life and disability/accident erage.
Specifically: ● we provide employee wages and benefits that are competitive and consistent with employee positions, skill levels, experience, knowledge and geographic location; ● we align our executives’ long-term equity compensation with our shareholders’ interests by linking realizable pay with stock performance; and ● all employees are eligible for health insurance, paid and unpaid leaves, a retirement plan and life and disability/accident coverage.
Utility Patent App # 63/402,124 FILING DATE 8/30/22 19 Insurance and Product Warranties We carry various insurance policies, including policies to cover general products liability, directors and officers, workers’ compensation and other casualty and property risks, to protect against certain risks of loss consistent with the exposures associated with the nature and scope of our operations.
Utility Patent App # 63/402,124 FILING DATE 8/30/22 20 Insurance and Product Warranties We carry various insurance policies, including policies to cover general products liability, directors and officers, workers’ compensation and other casualty and property risks, to protect against certain risks of loss consistent with the exposures associated with the nature and scope of our operations.
Forza is designing a 100,000 square foot facility designed for capacity and production of 1,000 units annually that it intends to build over time in various phases, starting with an initial 50,000 square foot facility that will have a capacity of 550 units annually that it anticipates the cost of which will be $8 million for the construction of the factory.
Forza is designing a 100,000 square foot facility designed for capacity and production of 1,000 units annually that it intends to build over time in various phases, starting with an initial 50,000 square foot facility that will have a capacity of 500 units annually that it anticipates the cost of which will be $8 million for the construction of the factory.
Large gas-powered engines often leak and produce carbon emissions, both of which are generally harmful to fragile marine ecosystems. By offering a fully electric boat to its customers and an alternative to traditional propulsion systems, Forza e can foster a more environmentally sustainable boat brand.
Large gas-powered engines often leak and produce carbon emissions, both of which are generally harmful to fragil marine ecosystems. By offering a fully electric boat to its customers and an alternative to traditional propulsion systems, Forza e can foster a more environmentally sustainable boat brand.
Utility Patent App # 63/402,124 FILED 8/30/2022 Double Motor Stack for an outboard powerhead arrangement Cascadia and other EV motor vendors offer a configuration where the DC motor can be stacked on top of another motor to double the power output of the vehicle.
Utility Patent App # 63/402,124 FILED 8/30/2023 Double Motor Stack for an outboard powerhead arrangement Cascadia and other EV motor vendors offer a configuration where the DC motor can be stacked on top of another motor to double the power output of the vehicle.
Additionally, fiberglass lids, plastic lids, electrical panels, bilge pumps, aerator pumps or other electrical devices (excluding stereos, depth finders, radar, chart plotters except for installation if installed by Twin Vee PowerCats Co.), steering systems, electrical panels, and pumps are covered under a one-year basic limited systems warranty.
Additionally, fiberglass lids, plastic lids, electrical panels, bilge pumps, aerator pumps or other electrical devices (excluding stereos, depth finders, radar, chart plotters except for installation if installed by Twin Vee), steering systems, electrical panels, and pumps are covered under a one-year basic limited systems warranty.
Forza anticipates having internal staff with the capability to provide an OTA update to resolve the issue remotely without the boat ever leaving the customer’s sight. As part of its customer satisfaction drive, Forza plans for its staff to make mobile service calls to the boat docks.
Forza anticipates having internal staff with the capability to provide an OTA (over the airwaves) update to resolve the issue remotely without the boat ever leaving the customer’s sight. As part of its customer satisfaction drive, Forza plans for its staff to make mobile service calls to the boat docks.
We have organized our business into three operating segments: (i) our gas-powered boat segment, which manufactures and distributes gas-powered boats; (ii) our electric-powered boat segment, which is developing fully electric boats, through our majority 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.
We have organized our business into three operating segments: (i) our gas-powered boat segment, which manufactures and distributes gas-powered boats; (ii) our electric-powered boat segment, which is developing fully electric boats, through our controlling interest 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.
Forza is still in the initial stages of establishing our service plans. Forza is in the process of identifying potential marinas, service centers, and technicians we would like to form strategic relationships with to ensure that it has a comprehensive service support system in place when our FX1 boats are sold.
Forza is still in the initial stages of establishing our service plans. Forza is in the process of identifying potential marinas, service centers, and technicians we would like to form strategic relationships with to ensure that it has a comprehensive service support system in place when our fully electric boats are sold.
Forza’s plans for its electric boats include the following strategies: ● Successfully Launch the FX1 . Forza believes the successful launch of its first commercially available electric boat is critical to its ability to capitalize on the marine electric vehicle market opportunity and establish itself as leaders in the industry.
Forza’s plans for its electric boats include the following strategies: ● Successfully Launch the fully electric sport boat . Forza believes the successful launch of its first commercially available electric boat is critical to its ability to capitalize on the marine electric vehicle market opportunity and establish itself as leaders in the industry.
Forza believes its FX1 will offer consumers an attractive cost of ownership compared to similar outboard powerboats. By using a single powertrain and customizing the systems within the electric powertrain and the rest of the boat, itsr boats are more energy-efficient, and therefore less expensive to operate and maintain. ● Environmental sustainability .
Forza believes its fully electric sport boat will offer consumers an attractive cost of ownership compared to similar outboard powerboats. By using a single powertrain and customizing the systems within the electric powertrain and the rest of the boat, its boats are more energy-efficient, and therefore less expensive to operate and maintain. ● Environmental sustainability .
On August 17, 2022, we entered into a five-year agreement with OneWater to establish our customer experience and service centers in OneWater’s current and future locations and other strategic locations across the United States pursuant to which OneWater will be the sole dealer distributing our products and OneWater’s retail locations may be used as potential delivery points for customers to pick up our products.
On August 17, 2022, we entered into a five-year agreement with One Water to establish our customer experience and service centers in One Water’s current and future locations and other strategic locations across the United States pursuant to which One Water will be the sole dealer distributing our products and One Water’s retail locations may be used as potential delivery points for customers to pick up our products.
Additionally, to support those looking for a more traditional way of purchasing a boat, or to accompany trade-ins, financing needs, and training or in states where there are limitations on direct sales, Forza will also market its boats through a partnership with OneWater Marine, Inc. (“OneWater”), one of the largest dealership networks in the United States.
Additionally, to support those looking for a more traditional way of purchasing a boat, or to accompany trade-ins, financing needs, and training or in states where there are limitations on direct sales, Forza will also market its boats through a partnership with One Water Marine, Inc. (“One Water”), one of the largest dealership networks in the United States.
Due to the growing demand for sustainable, environmentally friendly electric and alternative fuel commercial and recreational vehicles, our majority owned subsidiary, Forza, is designing and developing a line of electric-powered boats utilizing our electric vehicle (“EV”) technology to control and power our boats and proprietary outboard electric motor.
Due to the growing demand for sustainable, environmentally friendly electric and alternative fuel commercial and recreational vehicles, our controlling interest subsidiary, Forza, is designing and developing a line of electric-powered boats utilizing our electric vehicle (“EV”) technology to control and power our boats and proprietary outboard electric motor.
A few customers have in the past, and may in the future, account for a significant portion of our revenues in any one year or over a period of several consecutive years. For example, during the year end December 31, 2022 five dealers represented 48% of our sales.
A few customers have in the past, and may in the future, account for a significant portion of our revenues in any one year or over a period of several consecutive years. For example, during the year end December 31, 2023 five dealers represented 35% of our sales.
Full Non-provisional Patent App # 17,698,212 FILING DATE 03/18/23 Original Outboard Cover Design Original shape of outboard cover Design Patent App # 29/818,844 FILING DATE 12/10/21 Unibody Frame Shape of frame that allows vertical mounting of motor and transmission inside the outboard Design Patent App # 29/818,842 FILING DATE 12/10/21 Outboard cover design — ALPHA 01 version shape of the updated prototype cover and cowling Design Patent App # 29/819,262 FILING DATE 12/14/21 Trim and Tilt with cable routing thru pivot axis A trim and tilt assembly that routes cables through the pivot axis which protects cables, keeps the bundle from excessive bending and results in a cleaner design Utility Patent App # 63,287,740 FILING DATE 12/09/21 Jet Drive Lower Unit for an Electric Outboard The design of the lower jet drive as it is configured for the integration with the electric outboard Utility Patent App # 63,293,420 FILING DATE 12/23/21 Closed Loop Heat Exchanger Integrated in a Lower Drive Unit Integrate a cooling radiator inside of the lower drive propeller or jet drive unit itself.
Full Non-provisional Patent App # 63,207,748 FILING DATE 03/18/21 Received Notice of Patent Granted January 2024 Original Outboard Cover Design Original shape of outboard cover Design Patent App # 29/818,844 FILING DATE 12/10/21 Received Notice of Patent Granted January 2024 Unibody Frame Shape of frame that allows vertical mounting of motor and transmission inside the outboard Design Patent App # 29/818,842 FILING DATE 12/10/21 Received Notice of Patent Granted January 2024 Outboard cover design — ALPHA 01 version shape of the updated prototype cover and cowling Design Patent App # 29/819,262 FILING DATE 12/14/21 Received Notice of Patent Granted January 2024 Trim and Tilt with cable routing thru pivot axis A trim and tilt assembly that routes cables through the pivot axis which protects cables, keeps the bundle from excessive bending and results in a cleaner design Utility Patent App # 63,287,740 FILING DATE 12/09/21 19 Jet Drive Lower Unit for an Electric Outboard The design of the lower jet drive as it is configured for the integration with the electric outboard Utility Patent App # 63,293,420 FILING DATE 12/23/21 Closed Loop Heat Exchanger Integrated in a Lower Drive Unit Integrate a cooling radiator inside of the lower drive propeller or jet drive unit itself.
The receipt of grant funding is conditioned 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. We have selected our new site in McDowell County, North Carolina to build the Forza X1 factory.
The receipt of grant funding is conditioned 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 has selected its new site in McDowell County, North Carolina to build the Forza X1 factory.
Information on our website is not incorporated by reference into this Annual Report and you should not consider any information that is contained on or can be accessed through our website as part of this Annual Report. We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Information on our website is not incorporated by reference into this Annual Report and you should not consider any information that is contained on or can be accessed through our website as part of this Annual Report. We are subject to the reporting requirements of the Exchange Act.
As a result, Forza believes customers of its vehicles will enjoy many benefits, including: ● Extended Run Times and Recharging Flexibility . Forza is designing its FX1 to offer an intermediate-range option and an option that would increase the battery pack capacity for extended run times.
As a result, Forza believes customers of its vehicles will enjoy many benefits, including: ● Extended Run Times and Recharging Flexibility . Forza is designing its fully electric sport boat to offer an intermediate-range option and an option that would increase the battery pack capacity for extended run times.
Forza intends to design the FX1 with an adaptable platform architecture and common electric powertrain to provide the flexibility to use the FX1 platform to launch subsequent electric boat models cost-efficiently. ● Focus on Technological Advancements and Cost Improvement .
Forza intends to design the fully electric sport boat with an adaptable platform architecture and common electric powertrain to provide the flexibility to use the platform to launch subsequent electric boat models cost-efficiently. 13 ● Focus on Technological Advancements and Cost Improvement .
Implications of Being an Emerging Growth Company We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and therefore we intend to take advantage of certain exemptions from various public company reporting requirements, including not being required to have our internal controls over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments.
Fix My Boat, Inc. was incorporated on September 21, 2021 in Delaware. 22 Implications of Being an Emerging Growth Company We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and therefore we intend to take advantage of certain exemptions from various public company reporting requirements, including not being required to have our internal controls over financial reporting audited by our independent registered public accounting firm pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments.
Similarly, Forza is in the process of identifying potential marine service centers and technicians it would like to form strategic relationships with to ensure that it has a comprehensive service support system in place when its FX1 boats are sold, it will utilize OneWater dealerships and service centers where they are available.
Similarly, Forza is in the process of identifying potential marine service centers and technicians it would like to form strategic relationships with to ensure that it has a comprehensive service support system in place when its fully electric boats are sold, it will utilize One Water dealerships and service centers where they are available.
Floor Plan Financing Our North American dealers often purchase boats through floor plan financing programs with third-party floor plan financing providers. During the year ended December 31, 2022, all of our North American shipments were made pursuant to floor plan financing programs through which our dealers participate.
Floor Plan Financing Our North American dealers often purchase boats through floor plan financing programs with third-party floor plan financing providers. During the year ended December 31, 2023, a majority of our North American shipments were made pursuant to floor plan financing programs through which our dealers participate.
We expect this will strengthen our dealers’ ability to sell our products. 16 For the year ended December 31, 2022, our top five dealers on a consolidated basis accounted for approximately 48% of our consolidated revenues.
We expect this will strengthen our dealers’ ability to sell our products. For the year ended December 31, 2023, our top five dealers on a consolidated basis accounted for approximately 35% of our consolidated revenues.
Utility Patent App # 63/424,985 Filing Date 11/14/22 Docking Assist Motor Control and Auto-pilot mode for Trailer loading and launching Similar to docking assist GPS guided auto-pilot systems but this one is specifically intended to assist with single handed boat launching or loading to and from a trailer.
Utility Patent App # 18/507782 Filing Date 11/14/23 Docking Assist Motor Control and Auto-pilot mode for Trailer loading and launching Similar to docking assist GPS guided auto-pilot systems but this one is specifically intended to assist with single handed boat launching or loading to and from a trailer.
In February 2023, we announced our launch of our new LFG Marine, a new-monohull boat brand that will initially include a 22-inch center console monohull, a 25 inch dual console, single-engine day boat, a 22 inch dual console monohull and a 25 inch deck boat, single engine. We delivered the first LFG Marine boats in January of 2023.
In February 2023, we announced our launch of our new AquaSport, a new-monohull boat brand that will initially include a 22-foot center console monohull, a 25-foot dual console, single-engine day boat, a 22-foot dual console monohull and a 25 foot deck boat, single engine. We delivered our first monohull boats in January of 2023.
The catamaran hull can maintain a plane at lower speeds and catamaran boats create less drag in turn offering better fuel efficiency and a more economical boat to maintain. ● Fish one side of a Twin Vee .
The catamaran hull can maintain a plane at lower speeds and catamaran boats create less drag in turn offering better fuel efficiency and a more economical boat to maintain. ● Fish one side of a Twin Vee . Enjoy fishing without the extreme listing of a monohull.
According to the NMMA, sales of outboard engines in the United States (which includes outboard motors) were $3.31 billion, or 307,800 units in 2021. Consumer demand for higher-performance engines hit an all-time high in 2020, the market did see a decline of 6.6%.
According to the NMMA, sales of outboard engines in the United States (which includes outboard motors) were $3.6 billion in 2022. Consumer demand for higher-performance engines hit an all-time high in 2020. The market did see a decline of 6% in 2022, over 2021.
However, there can be no assurance that such negotiations will be successful or that Forza will meet the requirements to receive the anticipated incentives will be granted to us. Before the completion of new factory construction, all fabrication for Forza X1 boats will be performed onsite at Twin Vee’s facility or, if available additional manufacturing space will be leased.
However, there can be no assurance that such negotiations will be successful or that Forza will meet the requirements to receive the anticipated incentives will be granted to us. Before the completion of new factory construction, all fabrication for Forza’s boats will be performed onsite at Twin Vee’s facility.
Initially Forza was also our wholly owned subsidiary that became a majority owned subsidiary in August 2022, when Forza consummated the initial public offering of its shares of common stock, which are now listed on The Nasdaq Capital Market, resulting in our ownership of 67% of the outstanding common stock of Forza.
Initially Forza was also our wholly owned subsidiary that became a majority owned subsidiary in August 2022, when Forza consummated the initial public offering of its shares of common stock, which are now listed on The Nasdaq Capital Market. Our current ownership is 44% of the outstanding common stock of Forza, and is considered a controlling interest.
Following our initial public offering that closed on July 23, 2021 (the “IPO”), we determined in October 2021 that for several reasons, that we would market our new independent line of electric boats under a new brand name (and new subsidiary). Fix My Boat, Inc. was incorporated on September 21, 2021 in Delaware.
Following our initial public offering that closed on July 23, 2021 (the “IPO”), we determined in October 2021 that for several reasons, that we would market our new independent line of electric boats under a new brand name (and new subsidiary).
Forza completed the initial prototype in 2022 and plans to commence commercial scale production in late 2023. ● Invest in Infrastructure . Forza is investing $8.0 million from its August 2022 initial public offering to build a factory solely for the manufacture of Forza’s new line of electric boats.
Forza completed the initial prototype in 2022 and continues developing and testing. ● Invest in Infrastructure . Forza is investing $8.0 million from its August 2022 initial public offering to build a factory solely for the manufacture of Forza’s new line of electric boats.
Competition for individuals with experience designing, manufacturing and servicing electric boats is intense, and we may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future.
Competition for individuals with experience designing, manufacturing and servicing electric boats is intense, and we may not be able to attract, assimilate, train or retain additional highly qualified personnel in the future. The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business and prospects.
On February 17, 2015 ValueRich, Inc. consummated the acquisition of Twin Vee Catamarans, Inc. On April 26, 2016, ValueRich, Inc. changed its name and began operating under the name Twin Vee PowerCats, Inc.
On February 17, 2015 ValueRich, Inc. consummated the acquisition of Twin Vee Catamarans, Inc. On April 26, 2016, ValueRich, Inc. changed its name and began operating under the name Twin Vee PowerCats, Inc. On December 5, 2022, the merger of Twin Vee PowerCats, Inc. into our company was approved.
Business of Our Segments Gas-powered Boats Our gas-powered boat segment, which accounted for 100% of our net revenue in the 2022 fiscal year and 99% of our net revenue in the 2021 fiscal year, is located in Fort Pierce, Florida. We believe our company has been an innovator in the recreational and commercial power catamaran industry.
Business of Our Segments Gas-powered Boats Our gas-powered boat segment accounted for 100% of our net revenue in fiscal years 2023 and 2022. In 2023, our gas powered segment had locations in Fort Pierce, Florida, and White Bluff, Tennessee. We believe our company has been an innovator in the recreational and commercial power catamaran industry.
None of our employees are represented by a labor union and, since our founding in 1982, we have never experienced a labor-related work stoppage. Competitive Pay and Benefits Our compensation programs are designed to align the compensation of our employees with our performance and to provide the proper incentives to attract, retain and motivate employees to achieve superior results.
None of our employees are represented by a labor union. 21 Competitive Pay and Benefits Our compensation programs are designed to align the compensation of our employees with our performance and to provide the proper incentives to attract, retain and motivate employees to achieve superior results.
The failure to attract, integrate, train, motivate and retain these additional employees could seriously harm our business and prospects. 17 Raw Materials, Principal Suppliers, and Customers We purchase a number of our product parts and components from third-party suppliers, including the fiberglass we use to manufacture the fiberglass parts of our boats, hydrocarbon feedstocks and steel, as well as product parts and components, such as engines and electronic controls, through a sales order process.
Raw Materials, Principal Suppliers, and Customers We purchase a number of our product parts and components from third-party suppliers, including the fiberglass we use to manufacture the fiberglass parts of our boats, hydrocarbon feedstocks and steel, as well as product parts and components, such as engines and electronic controls, through a sales order process.
Furthermore, our unique new product development process enables us to renew our product portfolio with innovative offerings at a rate that we believe will be difficult for our competitors to match without significant additional capital investments.
This is the first boat in a line of boats, that will be sold under our new AquaSport brand. Furthermore, our unique new product development process enables us to renew our product portfolio with innovative offerings at a rate that we believe will be difficult for our competitors to match without significant additional capital investments.
Forza envisions significant inroads with boat manufacturers to retrofit various hull configurations, replacing traditional gas outboard motors and existing boat owners who could retrofit their boats with Forza’s outboard motors, controller, and battery packs. 13 Forza FX1 Future Factory Forza is currently designing a state-of-the-art manufacturing plant to incorporate the latest in closed-molded composite boat building technologies and electric engine assembly processes., 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 Forza of up to $1,367,100 over a twelve year period to establish a new manufacturing plant in McDowell County, North Carolina.
Forza X1 Future Factory Forza is currently building a state-of-the-art manufacturing plant to incorporate the latest in closed-molded composite boat building technologies and electric engine assembly processes., 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 Forza of up to $1,367,100 over a twelve year period to establish a new manufacturing plant in McDowell County, North Carolina.
During the year ended December 31, 2022, one individual dealers had sales of over 10% of our total sales, and one customer represented 12% of total sales. During the year ended December 31, 2021, five individual customers had sales of over 10% of our total sales and combined these five customers represented 67% of total sales.
During the year ended December 31, 2023, one individual dealer had sales of over 10% of our total sales, and one customer represented 10.3% of total sales. During the year ended December 31, 2022, one individual dealer had sales of over 10% of our total sales, and one customer represented 12% of total sales.
We estimate many consumers are increasingly willing to consider buying electric-powered boats due to the environmental and economic consequences of using gasoline-powered vehicles, as demonstrated by the increased sales of hybrid and electric automobiles in recent years. In its Electric Vehicle Outlook 2021, Bloomberg NEF estimated that there are currently 12 million passenger electric vehicles on the road.
We estimate consumers are increasingly willing to consider buying electric-powered boats due to the environmental and economic consequences of using gasoline-powered vehicles, as demonstrated by the increased sales of hybrid and electric automobiles in recent years.
Prior to Forza’s incorporation on October 15, 2021, the electric boat business was operated as our Electra Power Sports™ Division.
Forza X1, Inc. was initially incorporated as Electra Power Sports, Inc. on October 15, 2021, which name was subsequently changed to Forza X1, Inc. on October 29, 2021. Prior to Forza’s incorporation on October 15, 2021, the electric boat business was operated as our Electra Power Sports™ Division.
Our Dealer Network We primarily sell our gas-powered boats through a network of 20 independent dealers in 34 locations across North America, the Caribbean (one in the Bahamas, Puerto Rico and Cayman Islands) and Central America (Panama City, Panama).
Our Dealer Network We primarily sell our gas-powered boats through a network of 47 independent dealers in 47 locations across North America, the Caribbean (one in the Bahamas, Puerto Rico and Cayman Islands) and Central America (Panama City, Panama). We are always seeking to recruit and establish new dealers and distributors domestically and are striving to develop international distribution.
Pierce, Florida 34982 and our telephone number is (772) 429-2525. We maintain our corporate website at www.twinvee.com.
Corporate Information Our principal executive office is located at 3101 S. US-1, Ft. Pierce, Florida 34982 and our telephone number is (772) 429-2525. We maintain our corporate website at www.twinvee.com.
Forza has selected a web design firm for the development of its website and app. Its goal is to have the app completed by the second quarter of 2024.
Forza has selected a web design firm for the development of its website and app.
The following table sets forth certain information regarding Forza’s current patent applications: IDEA / CONCEPT NAME DESCRIPTION IP TYPE App Number and Filing Date 360 Steering Lower Pod with Disconnect For outboard, lower pod steering mechanism using slewing bearing and spur gear mechanism allowing for a full 360 degree rotation.
See “Intellectual Property Risks.” 18 IDEA / CONCEPT NAME DESCRIPTION IP TYPE App Number and Filing Date 360 Steering Lower Pod with Disconnect For outboard, lower pod steering mechanism using slewing bearing and spur gear mechanism allowing for a full 360-degree rotation.
Looking ahead to 2023, early indications point to continued healthy demand with new retail unit sales expected to remain on par with 2022. 14 Outboard Motor Market An outboard motor is a propulsion system for boats, consisting of a self-contained unit that includes engine, gearbox and propeller or jet drive, designed to be affixed to the outside of the boat.
Outboard Motor Market An outboard motor is a propulsion system for boats, consisting of a self-contained unit that includes engine, gearbox and propeller or jet drive, designed to be affixed to the outside of the boat.
With respect to the foregoing, Forza has not yet: (i) entered into any arrangements with third parties to provide financing services through its web and app platform, or (ii) hired staff for our intended support and service department. Forza is still in the initial stages of establishing its distribution and service plans.
These videos would be accessible on Forza’s web and app platform and the boat’s onboard computer for quick access. 11 With respect to the foregoing, Forza has not yet: (i) entered into any arrangements with third parties to provide financing services through its web and app platform, or (ii) hired staff for our intended support and service department.
Prior to the beginning of each year, we establish a minimum number of units that each dealer must acquire based upon indications of interest from the dealers. Payment for the units is made by the dealer or a third-party lender once the boat is manufactured and delivered to the dealer. Dealers are not contractually obligated to purchase any boats.
Payment for the units is made by the dealer or a third-party lender once the boat is manufactured and delivered to the dealer. Dealers are not contractually obligated to purchase any boats.
We are currently designing numerous new boat models to meet market demand and grow our business, and our current focus is on bring a full line of monohull boats to the market under the LFG Marine brand. In addition, Forza expects to bring multiple models of its fully electric boat to market in late 2023. Price Point.
We will further diversify our offerings in 2024, with new models to our monohull line. Focus on Innovative Product Offerings. We are currently designing numerous new boat models to meet market demand and grow our business, and our current focus is on bring a full line of monohull boats to the market under the AquaSport brand. 14 Price Point.
Forza will also work to establish its 500-mile radius mobile service vans and trucks before selling the first Forza X1 product so that local customers will have that option. 11 The OneWater Agreement Additionally, to support those looking for a more traditional way of purchasing a boat, or to accompany trade-ins, financing needs, and training, we will also market our boats through a partnership with OneWater, one of the largest dealership networks in the United States.
The One Water Agreement Additionally, to support those looking for a more traditional way of purchasing a boat, or to accompany trade-ins, financing needs, and training, we will also market our boats through a partnership with One Water, one of the largest dealership networks in the United States.
The LFG Marine brand is expected to appeal to first-time boat buyers, the freshwater market, and consumers that prefer a monohull boat opening a significantly larger portion of the market share to Twin Vee.
In May of 2023, we entered into a finance lease, securing the rights to the AquaSport brand and facility in White Bluff, Tennessee. The AquaSport brand is expected to appeal to first-time boat buyers, the freshwater market, and consumers that prefer a monohull boat opening a significantly larger portion of the market share to Twin Vee.
The loss of business from a significant customer could have a material adverse effect on our business, financial condition, results of operations and cash flows. 18 Intellectual Property We have not protected our intellectual property rights for our gas-powered motor products through patents or formal copyright registration, and we do not currently have any patent applications pending related to our gas-powered boats.
Intellectual Property We have not protected our intellectual property rights for our gas-powered motor products through patents or formal copyright registration, and we do not currently have any patent applications pending related to our gas-powered boats.
As a member of our network, dealers in North America may qualify for floor plan financing programs, rebates, seasonal discounts, promotional co-op payments and other allowances.
We establish performance criteria that our dealers must meet in order to be part of our network to ensure our dealer network remains strong, which include minimum annual purchase orders. As a member of our network, dealers in North America may qualify for floor plan financing programs, rebates, seasonal discounts, promotional co-op payments and other allowances.
We intend to launch a number of new products and features with best-in-class quality, with the goal of increasing sales and significant margin expansion. For example, w e currently have 8 gas-powered models in production ranging in size from our 24-foot, dual engine, center console to our newly designed 40-foot offshore 400 GFX.
For example, w e currently have 8 gas-powered models in production ranging in size from our 24-foot, dual engine, center console to our newly designed 40-foot offshore 400 GFX. We designed our first monohull boat, a 22 foot, available in both center and dual consoles.
Simplify the cooling circuit by eliminating the need for a raw sea water intake. Full Non-provisional Patent App # 18/150,943 FILING DATE 1/06/22 Outboard Motor Cowling Latch Assembly The outboard top cover should not be removed until the electric motor and inverter is safely de-energized which typically takes 4 to 5 seconds after powering down.
Full Non-provisional Patent App # 18/150,943 FILING DATE 1/06/22 cooling circuit with cartridge style inserts in the lower unit Similar to the above but a more refined methodology of using a set of unique 3D metal printed heat exchanger cartridges Full Non-provisional Patent App # 18/404,991 FILING DATE 1/05/24 Outboard Motor Cowling Latch Assembly The outboard top cover should not be removed until the electric motor and inverter is safely de-energized which typically takes 4 to 5 seconds after powering down.
Temporary shortages, when they do occur, usually involve manufacturers of these products adjusting model mix, introducing new product lines, or limiting production in response to an industry-wide reduction in boat demand or, as recently experienced during the COVID-19 pandemic, in finding persons able to deliver the parts and components in a timely manner.
We purchase motors from three different manufactures, we have not experienced any material shortages in any of our product parts, or components. Temporary shortages, when they do occur, usually involve manufacturers of these products adjusting model mix, introducing new product lines, or limiting production in response to an industry-wide reduction in boat demand.
We consistently review our distribution network to identify opportunities to expand our geographic footprint and improve our coverage of the market. We believe that our diverse product offering and strong market position in each region of the United States helped us capitalize on growth opportunities as our industry recovered from the economic downturn.
We believe that our diverse product offering and strong market position in each region of the United States helped us capitalize on growth opportunities as our industry recovered from the economic downturn. We have the ability to opportunistically add new dealers and new dealer locations to previously underserved markets and use data and performance metrics to monitor dealer performance.
The report estimates the volume-weighted average cost of battery packs will drop below $100/kW in 2024. The Company is establishing itself in the market at the right time to help keep production costs as low as possible and make our boats affordable for our customers.
According to Bloomberg NEF’s report, it found that the volume-weighted average price of a lithium-ion battery pack fell 14% in 2023. to $139/kWh (kilowatt-hour). The Company is establishing itself in the market at the right time to help keep production costs as low as possible and make our boats affordable for our customers.
Enjoy fishing without the extreme listing of a monohull. 8 Twin Vee’s Mono-Hull We expect our new LFG Marine bring to appeal to first-time boat buyers, the freshwater market and consumers that prefer a mono-hull boat.
Twin Vee’s Monohull We expect our new monohull line to appeal to first-time boat buyers, the freshwater market and consumers that prefer a monohull boat. This new monohull brand will be selling into a much larger portion of the market.
Forza intends to provide a series of videos that demonstrate our boats’ safe operation and upkeep. These videos would be accessible on Forza’s web and app platform and the boat’s onboard computer for quick access.
Forza intends to provide a series of videos that demonstrate our boats’ safe operation and upkeep.
The prevalence of batteries necessary to sustain a marine EV model line is expected to rise and become cheaper. Bloomberg NEF’s Long-Term Electric Vehicle Outlook reports that annual lithium-battery demand has proliferated in recent years and meeting the demand will require unprecedented but achievable increases in materials, components, and cell production.
Bloomberg NEF’s Long-Term Electric Vehicle Outlook reports that annual lithium-battery demand has proliferated in recent years and meeting the demand will require unprecedented but achievable increases in materials, components, and cell production. Battery production capacity is expanding as more factories are brought online. Moreover, battery technology that improves power and capacity is being designed, developed, and adopted regularly.
If we are not able to pass these additional costs along to our dealers, it may have a negative impact on our business and financial condition. 20 Employees/Human Capital We currently, employ approximately,170 employees, 154 employees in our gas-powered boat segment, all of whom are full time employees, and Forza has 16 full time employees working on electric-powered boats.
Employees/Human Capital We currently employ approximately 90 employees in our gas-powered boat segment, all of whom are full time employees. Forza has 9 full time employees working on electric-powered boats.
Forza intends to establish and develop strategic relationships with industry leaders to launch our planned electric boats and sell its electric boat powertrain components.
Forza intends to establish and develop strategic relationships with industry leaders to launch our planned electric boats and sell its electric boat powertrain components. Forza envisions significant inroads with boat manufacturers to retrofit various hull configurations, replacing traditional gas outboard motors and existing boat owners who could retrofit their boats with Forza’s outboard motors, controller, and battery packs.
The additional cost of complying with these regulations has increased our cost to purchase the engines and, accordingly, has increased the cost to manufacture our products.
The additional cost of complying with these regulations has increased our cost to purchase the engines and, accordingly, has increased the cost to manufacture our products. If we are not able to pass these additional costs along to our dealers, it may have a negative impact on our business and financial condition.
Our home base operations for our gas-powered boats is in Fort Pierce, Florida and is a 7.5-acre facility with several buildings totaling over 75,000 square feet. We currently employ approximately 170 people. 7 During the 2022 fiscal year, we focused our efforts on increased throughput through our facility, and fully integrating the new models that we introduced in 2021.
We currently employ approximately 80 people. 7 During the 2023 fiscal year, we focused our efforts on increased throughput through our facility, and fully integrating the new models that we introduced in 2023.
Our Strategy Overall Strategy We intend to capitalize on the thriving broader marine industry through the following strategies: Develop New and Innovative Products in Our Core Market. As an innovator, designer, manufacturer, and marketer of catamaran powerboats, we strive to design new and inventive products that appeal to a broad customer base.
As an innovator, designer, manufacturer, and marketer of catamaran powerboats, we strive to design new and inventive products that appeal to a broad customer base. We intend to launch a number of new products and features with best-in-class quality, with the goal of increasing sales and significant margin expansion.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

110 edited+42 added−28 removed260 unchanged
Biggest changeAmong other things included in these provisions: ● our board of directors is divided into three classes, one class of which is elected each year by our stockholders with the directors in each class to serve for a three-year term; ● the authorized number of directors can be changed only by resolution of our board of directors; ● directors may be removed only by the affirmative vote of the holders of at least sixty percent (60%) of our voting stock, whether for cause or without cause; ● our bylaws may be amended or repealed by our board of directors or by the affirmative vote of sixty-six and two-thirds percent (66 2/3%) of our stockholders; ● stockholders may not call special meetings of the stockholders or fill vacancies on the board of directors; ● our board of directors will be authorized to issue, without stockholder approval, preferred stock, the rights of which will be determined at the discretion of the board of directors and that, if issued, could operate as a ”poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our board of directors does not approve; ● our stockholders do not have cumulative voting rights, and therefore our stockholders holding a majority of the shares of common stock outstanding will be able to elect all of our directors; and ● our stockholders must comply with advance notice provisions to bring business before or nominate directors for election at a stockholder meeting.
Biggest changeAmong other things included in these provisions: ● our board of directors is divided into three classes, one class of which is elected each year by our stockholders with the directors in each class to serve for a three-year term; ● the authorized number of directors can be changed only by resolution of our board of directors; ● directors may be removed only by the affirmative vote of the holders of at least sixty percent (60%) of our voting stock, whether for cause or without cause; ● our bylaws may be amended or repealed by our board of directors or by the affirmative vote of sixty-six and two-thirds percent (66 2/3%) of our stockholders; ● stockholders may not call special meetings of the stockholders or fill vacancies on the board of directors; ● our board of directors will be authorized to issue, without stockholder approval, preferred stock, the rights of which will be determined at the discretion of the board of directors and that, if issued, could operate as a ”poison pill” to dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our board of directors does not approve; ● our stockholders do not have cumulative voting rights, and therefore our stockholders holding a majority of the shares of common stock outstanding will be able to elect all of our directors; and ● our stockholders must comply with advance notice provisions to bring business before or nominate directors for election at a stockholder meeting. 49 Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
A substantial deterioration in the number of dealers or 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 health of our dealers and their continued access to financing.
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 health of our dealers and their continued access to financing.
Under environmental laws, we may be liable for remediation of contamination at sites where our hazardous wastes have been disposed or at our current facility, regardless of whether our facility is owned or leased or whether the environmental conditions were created by us, a prior owner or tenant, or a third-party.
Under environmental laws, we may be liable for remediation of contamination at sites where our hazardous wastes have been disposed or at our current facility, regardless of whether our facility is owned or leased or whether the environmental conditions were created by us, a prior owner or tenant, or third-party.
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.
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.
Our boats are not necessities and in times of economic hardship, and consumers may cease purchasing non-essential items. Demand for our boats may be adversely affected by competition from other activities that occupy consumers’ leisure time and by changes in consumer lifestyle, usage pattern or taste.
Our boats are not necessities and in times of economic hardship, consumers may cease purchasing non-essential items. Demand for our boats may be adversely affected by competition from other activities that occupy consumers’ leisure time and by changes in consumer lifestyle, usage pattern or taste.
If the customer has questions, concerns, or needs support through the sales and purchase process, they will be able to contact Forza X1 through the website or app with any questions, concerns.
If the customer has questions, concerns, or needs support through the sales and purchase process, they will be able to contact Forza X1 through the website or app with any questions or concerns.
Many of the key semiconductor chips Forza intends to use in its electric boats come from limited or single sources of supply, and therefore a disruption with any one manufacturer or supplier in the supply chain would have an adverse effect on our ability to effectively manufacture and timely deliver its boats.
Many of the key semiconductor chips Forza intends to use in its electric boats come from limited or single sources of supply, and therefore a disruption with any one manufacturer or supplier in our supply chain would have an adverse effect on our ability to effectively manufacture and timely deliver its boats.
As a result, we cannot be certain that the patent applications that Forza files will issue, or that issued patents will afford protection against competitors with similar technology. In addition, its competitors may design around Forza’s issued patents, which may adversely affect its and our business, prospects, financial condition, results of operations, and cash flows.
As a result, we cannot be certain that the patent applications that Forza files will issue, or that our issued patents will afford protection against competitors with similar technology. In addition, its competitors may design around Forza’s issued patents, which may adversely affect its and our business, prospects, financial condition, results of operations, and cash flows.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our and Forza’s competitive business position.
Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our or Forza’s competitive business position.
These factors include, but are not limited to: ● Seasonal consumer demand for our products; ● Discretionary spending habits; ● Changes in pricing in, or the availability of supply in, the powerboat market; ● Failure to maintain a premium brand image; ● Disruption in the operation of our manufacturing facilities; ● Variations in the timing and volume of our sales; ● The timing of our expenditures in anticipation of future sales; ● Sales promotions by us and our competitors; ● Changes in competitive and economic conditions generally; ● Consumer preferences and competition for consumers’ leisure time; ● Impact of unfavorable weather conditions; ● Changes in the cost or availability of our labor; and ● Increased fuel prices.
These factors include, but are not limited to: ● Seasonal consumer demand for our products; ● Discretionary spending habits; ● Changes in pricing in, or the availability of supply in, the powerboat market; ● Failure to maintain a premium brand image; ● Disruption in the operation of our manufacturing facilities; ● Variations in the timing and volume of our sales; ● The timing of our expenditures in anticipation of future sales; 25 ● Sales promotions by us and our competitors; ● Changes in competitive and economic conditions generally; ● Consumer preferences and competition for consumers’ leisure time; ● Impact of unfavorable weather conditions; ● Changes in the cost or availability of our labor; and ● Increased fuel prices.
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. 43 We have not yet 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, or internal controls.
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 have not yet 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, or internal controls.
Any facility that it builds will require a significant capital investment and is expected to take at least one to two years to build and become fully operational. In addition, even if the construction of its planned facility is completed when anticipated, production at its facility could be delayed whether due to lack of equipment, workforce issues or other reasons.
Any facility that it builds will require a significant capital investment and is expected to take at least one to two years to build and become fully operational. In addition, even if the construction of our planned facility is completed when anticipated, production at its facility could be delayed whether due to lack of equipment, workforce issues or other reasons.
If Forza is unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in its software and hardware, or fails to deploy updates to its software properly, it would suffer damage to its reputation, loss of customers, loss of revenue or liability for damages, any of which could adversely affect its business, prospects, financial condition, results of operations, and cash flows.
If Forza is unable to prevent or effectively remedy errors, bugs, vulnerabilities or defects in its software and hardware, or fails to deploy updates to its software properly, it would suffer damage to its reputation, loss of customers, loss of revenue or liability for damages, any of which could adversely affect our business, prospects, financial condition, results of operations, and cash flows.
We are actively monitoring the effects these disruptions and increasing inflation could have on our operations. These conditions make it extremely difficult for us to accurately forecast and plan future business activities. 24 Our annual and quarterly financial results are subject to significant fluctuations depending on various factors, many of which are beyond our control .
We are actively monitoring the effects these disruptions and increasing inflation could have on our operations. These conditions make it extremely difficult for us to accurately forecast and plan future business activities. Our annual and quarterly financial results are subject to significant fluctuations depending on various factors, many of which are beyond our control .
Any defects, delays or legal restrictions on boat features, or other failure of Forza’s boats to perform as expected, could harm its reputation and result in delivery delays, product recalls, product liability claims, breach of warranty claims and significant warranty and other expenses, and could have a material adverse impact on its business, results of operations, prospects and financial condition.
Any defects, delays or legal restrictions on boat features, or other failure of Forza’s boats to perform as expected, could harm its reputation and result in delivery delays, product recalls, product liability claims, breach of warranty claims and significant warranty and other expenses, and could have a material adverse impact on our business, results of operations, prospects and financial condition.
Forza’s software and hardware may contain errors, bugs, vulnerabilities or design defects, and its systems are subject to certain technical limitations that may compromise its ability to meet its objectives. Some errors, bugs, vulnerabilities, or design defects inherently may be difficult to detect and may only be discovered after the code has been released for external or internal use.
Forza’s software and hardware may contain errors, bugs, vulnerabilities or design defects, and our systems are subject to certain technical limitations that may compromise its ability to meet its objectives. Some errors, bugs, vulnerabilities, or design defects inherently may be difficult to detect and may only be discovered after the code has been released for external or internal use.
We, through Forza, currently plans to mainly sell its electric-powered boats directly to customers rather than through franchised dealerships (unless required to do so by certain states), primarily through the Forza X1 website and app platform, subject to obtaining applicable dealer licenses and equivalent permits in such jurisdictions.
Forza currently plans to mainly sell its electric-powered boats directly to customers rather than through franchised dealerships (unless required to do so by certain states), primarily through the Forza X1 website and app platform, subject to obtaining applicable dealer licenses and equivalent permits in such jurisdictions.
Although Forza will attempt to remedy any issues it observes in its products as effectively and rapidly as possible, such efforts could significantly distract management’s attention from other important business objectives, may not be timely, may hamper production or may not be to the satisfaction of its customers.
Although Forza will attempt to remedy any issues it observes in its products as effectively and rapidly as possible, such efforts could significantly distract management’s attention from other important business objectives, 39 may not be timely, may hamper production or may not be to the satisfaction of its customers.
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.
In addition, applicable laws regulating dealer relations may also require us to repurchase our products from our dealers under certain circumstances, 27 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 Forza is unable to complete its own facility and commence production as planned, its business, prospects, financial condition, results of operations, and cash flows would be materially and adversely affected and the value of your investment in its company may be materially adversely affected. Forza may not receive the anticipated grant funding .
If Forza is unable to complete our own facility and commence production as planned, its business, prospects, financial condition, results of operations, and cash flows would be materially and adversely affected and the value of your investment in its company may be materially adversely affected. Forza may not receive the anticipated grant funding .
Although the proceeds of our initial public offering and follow on offering should be sufficient to fund our operations, if cash on hand and cash generated from operations and from our initial public offering and follow on offering are not sufficient to meet our cash requirements, we will need to seek additional capital, potentially through debt or equity financings, to fund our growth.
Although the proceeds of our initial public offering and follow on offering should be sufficient to fund our operations, if cash on hand and cash generated from operations and from our initial public offering and follow on offering are not sufficient to meet our cash requirements, we will need to seek additional capital, 31 potentially through debt or equity financings, to fund our growth.
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. 26 We may be required to repurchase inventory of certain dealers .
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 .
Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, cash requirements, contractual restrictions, and other factors that our board of directors may deem relevant.
Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our results of operations, financial condition, 48 cash requirements, contractual restrictions, and other factors that our board of directors may deem relevant.
To further promote our brand and Forza’s brand, we and Forza may be required to change our marketing practices, which could result in substantially increased advertising expenses, including the need to use traditional media such as television, radio and print.
To further promote our brands and Forza’s brand, we and Forza may be required to change our marketing practices, which could result in substantially increased advertising expenses, including the need to use traditional media such as television, radio and print.
While our employees who handle these and other potentially hazardous or toxic materials receive specialized training and wear protective clothing, there is still a risk that they, or others, may be exposed to these substances.
While our employees who handle these and other potentially hazardous or toxic materials receive specialized training and wear protective clothing, there is still a risk that they, 28 or others, may be exposed to these substances.
We believe that our brand is a significant contributor to the success of our business and that maintaining and enhancing our brand is important to expanding our consumer and dealer base. Failure to continue to protect our brand may adversely affect our business, financial condition, and results of operations.
We believe that our brand is a significant contributor to the success of our business and that maintaining and enhancing our brand is important to expanding our consumer and dealer base. Failure to continue to protect our brand may adversely affect our business, financial condition, 30 and results of operations.
In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention. 41 Risks Related to our Industry Demand in the powerboat industry is highly volatile.
In addition, any litigation or claims, whether or not valid, could result in substantial costs, negative publicity and diversion of resources and management attention. Risks Related to our Industry Demand in the powerboat industry is highly volatile.
If Forza’s direct sales model does not develop as expected or develops more slowly than expected, it may be required to modify or abandon our sales model, which could materially and adversely affect its business, prospects, financial condition, results of operations, and cash flows. 34 Forza’s ability to generate meaningful product revenue from its electric-powered boats will depend on consumer adoption of electric boats.
If Forza’s direct sales model does not develop as expected or develops more slowly than expected, it may be required to modify or abandon our sales model, which could materially and adversely affect its business, prospects, financial condition, results of operations, and cash flows. 36 Forza’s ability to generate meaningful product revenue from our electric-powered boats will depend on consumer adoption of electric boats.
This model of boat distribution is relatively new, different from the predominant current distribution model for boat manufacturers and, with limited exceptions, unproven, which subjects us to substantial risk. We and Forza has no experience in selling or leasing boats direct-to-consumer and therefore this model may require significant expenditures and provide for slower expansion than the traditional dealer franchise system.
This model of boat distribution is relatively new, different from the predominant current distribution model for boat manufacturers and, with limited exceptions, unproven, which subjects us to substantial risk. We and Forza have no experience in selling or leasing boats direct-to-consumer and therefore this model may require significant expenditures and provide for slower expansion than the traditional dealer franchise system.
If a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition, or results of operations. 47 Item 1B. Unresolved Staff Comments.
If a court were to find these provisions of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition, or results of operations. Item 1B. Unresolved Staff Comments. None.
The loss of the technical knowledge and management and industry expertise of any of our key personnel could result in delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect our operating results. 31 Certain of our shareholders have sufficient voting power to make corporate governance decisions that could have a significant influence on us and the other stockholders.
The loss of the technical knowledge and management and industry expertise of any of our key personnel could result in delays in product development, loss of customers and sales and diversion of management resources, which could adversely affect our operating results. 32 Certain of our shareholders have sufficient voting power to make corporate governance decisions that could have a significant influence on us and the other stockholders.
There can be no assurance that Forza will meet the conditions necessary to receive the grant funding. 23 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.
There can be no assurance that Forza will meet the conditions necessary to receive the grant funding. 24 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.
We and Forza have recently begun to use confidentiality agreements with our and its collaborators, employees, consultants, outside collaborators and other advisors to protect its proprietary technology and processes.
We and Forza have recently begun to use confidentiality agreements with our and its collaborators, employees, 42 consultants, outside collaborators and other advisors to protect its proprietary technology and processes.
In particular, increased demand for semiconductor chips in 2020, due in part to the COVID-19 pandemic and increased demand for consumer electronics that use these chips, has resulted in a continued global shortage of chips through 2022. As a result, Forza’s ability to source semiconductor chips to be used in its electric boats has been adversely affected.
In particular, increased demand for semiconductor chips in 2020, due in part to the COVID-19 pandemic and increased demand for consumer electronics that use these chips, has resulted in a continued global shortage of chips through 2022. As a result, Forza’s ability to source semiconductor chips to be used in our electric boats has been adversely affected.
For example, Forza will not be able to utilize long established relationships developed by Twin Vee with its dealer network. Moreover, we Forza will be competing with companies with well established distribution channels. Forza’s success will depend in large part on its ability to effectively develop its own sales channels and marketing strategies.
For example, Forza will not be able to utilize long established relationships developed by Twin Vee with its dealer network. Moreover, Forza will be competing with companies with well established distribution channels. Forza’s success will depend in large part on our its ability to effectively develop our its own sales channels and marketing strategies.
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 FX1 electric boat. As such, Forza has not yet demonstrated, and the success of Forza is wholly dependent upon, its ability to commercialize its products.
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 fully electric boat. As such, Forza has not yet demonstrated, and the success of Forza is wholly dependent upon, its ability to commercialize its products.
Semiconductor chips are a vital input component to the electrical architecture of electric boats, controlling wide aspects of the Forza boats’ operations.
Semiconductor chips are a vital input component to the electrical architecture of our electric boats, controlling wide aspects of the Forza boats’ operations.
Forza’s ability to utilize Twin Vee’s manufacturing capacity pending completion of its own facility will be subject to its availability as determined by Twin Vee and Twin Vee has no obligation to make any manufacturing capacity available to Forza under the Transition Services Agreement.
Our ability to utilize Twin Vee’s manufacturing capacity pending completion of its own facility will be subject to its availability as determined by Twin Vee and Twin Vee has no obligation to make any manufacturing capacity available to Forza under the Transition Services Agreement.
Forza’s boats will rely on software and hardware that is highly technical, and if these systems contain errors, bugs, vulnerabilities, or design defects, or if Forza is unsuccessful in addressing or mitigating technical limitations in its systems, its business could be adversely affected.
Forza’s boats will rely on software and hardware that is highly technical, and if these systems contain errors, bugs, vulnerabilities, or design defects, or if Forza is unsuccessful in addressing or mitigating technical limitations in our systems, our business could be adversely affected.
Until it is able to expand its manufacturing capacity and build the planned manufacturing facility, it expects to continue to share Twin Vee’s current manufacturing facility, which has a limited capacity and may not be able to satisfy its manufacturing needs.
Until it is able to expand our manufacturing capacity and build the planned manufacturing facility, it expects to continue to share Twin Vee’s current manufacturing facility, which has a limited capacity and may not be able to satisfy our manufacturing needs.
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 Forza’s proprietary outboard electric motor; ● manufacturing the FX1 sport boats; ● developing a vertically integrated direct-to-consumer distribution system; and ● conducting sales and marketing activities.
The successful commercialization of any products will require us to perform a variety of functions, including: ● completing the design and testing for the fully electric sport boat and our Forza’s proprietary outboard electric motor; ● manufacturing the fully electric sport boats; ● developing a vertically integrated direct-to-consumer distribution system; and ● conducting sales and marketing activities.
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 Forza would be able to maintain that market.
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 fully electric sport boat develops, there can be no assurance that Forza would be able to maintain that market.
There can be no assurance that Forza will be able to complete development of the FX1 when anticipated, if at all, that we 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 Forza’s anticipated FX1 product, its sales and growth for our product may not develop as expected, or at all.
There can be no assurance that Forza will be able to complete development of the fully electric sport boat when anticipated, if at all, that we will be able to mass produce the fully electric sport boat or that the anticipated features or services to be included in the fully electric 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.
Forza expects to make additional capital expenditures and incur substantial costs as it completes the design and engineering of the FX1 and prepare to commercially launch sales of its boats and grow its business, including research and development expenses, raw material procurement costs, sales and distribution expenses as we build our brand and market its boats and general and administrative expenses as Forza scales its operations, identifies and commits resources to investigate new areas of demand and incurs costs as a public company.
Forza expects to make additional capital expenditures and incur substantial costs as it completes the design and engineering of the fully electric sport boat and prepare to commercially launch sales of its boats and grow its business, including research and development expenses, 35 raw material procurement costs, sales and distribution expenses as we build our brand and market its boats and general and administrative expenses as Forza scales its operations, identifies and commits resources to investigate new areas of demand and incurs costs as a public company.
Our Chief Executive Officer owns 25.84% of our outstanding common stock. As a result, our Chief Executive Officer does and will have significant influence over our management and affairs and over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.
Our Chief Executive Officer owns 27.4% of our outstanding common stock. As a result, our Chief Executive Officer does and will have significant influence over our management and affairs and over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions.
We expect that our ability to develop, maintain and strengthen the Twin Vee brand and the Forza brand will also depend heavily on the success of our marketing efforts.
We expect that our ability to develop, maintain and strengthen the Twin Vee, AquaSport and Forza brands will also depend heavily on the success of our marketing efforts.
Our future success will depend in significant part upon the continued service of our executive officers. We cannot assure you that we will be able to continue to attract or retain such persons.
Our future success will depend in significant part upon the continued service of our Chief Executive Officer and other executive officers. We cannot assure you that we will be able to continue to attract or retain such persons.
Additionally, the existence of any material weakness or significant deficiency requires management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner.
Additionally, the existence of the material weakness has required management to devote significant time and incur significant expense to remediate any such material weaknesses or significant deficiencies and management may not be able to remediate any such material weaknesses or significant deficiencies in a timely manner.
If Forza’s patents expire or are not maintained, Forza’s patent applications are not granted or patent rights are contested, circumvented, invalidated or limited in scope, Forza may not be able to prevent others from selling, developing or exploiting competing technologies or products, which could have a material adverse effect on its and our business, prospects, financial condition, results of operations, and cash flows. 39 Forza cannot assure that its pending applications will issue as patents.
If Forza’s patents expire or are not maintained, Forza’s patent applications are not granted or patent rights are contested, circumvented, invalidated or limited in scope, Forza may not be able to prevent others from selling, developing or exploiting competing technologies or products, which could have a material adverse effect on its and our business, prospects, financial condition, results of operations, and cash flows.
These instances of volatility and market turmoil could adversely affect our operations and the trading price of our common shares resulting in: ● customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our products and services; and ● third-party suppliers being unable to produce parts and components for our products in the same quantity or on the same timeline or being unable to deliver such parts and components as quickly as before or subject to price fluctuations, which could have a material adverse effect on our production or the cost of such production. 42 Risks Relating to Ownership of our Common Stock Terms of subsequent financings may adversely impact your investment.
These instances of volatility and market turmoil could adversely affect our operations and the trading price of our common shares resulting in: ● customers postponing purchases of our products and services in response to tighter credit, unemployment, negative financial news and/or declines in income or asset values and other macroeconomic factors, which could have a material negative effect on demand for our products and services; and ● third-party suppliers being unable to produce parts and components for our products in the same quantity or on the same timeline or being unable to deliver such parts and components as quickly as before or subject to price fluctuations, which could have a material adverse effect on our production or the cost of such production.
Any investment decision will not be made with the same data as would be available as if we had a longer history of public reporting. We have incurred losses for the quarter ended June 30, 2022 and the year ended December 31, 2021 and could continue to incur losses in the future.
Any investment decision will not be made with the same data as would be available as if we had a longer history of public reporting. We have incurred losses for the years ended December 31, 2023 and 2022 and could continue to incur losses in the future.
For fiscal 2022, our top five dealers accounted for approximately 48% of our consolidated revenues. During the year ended December 31, 2022, one individual dealer had sales of over 10% of our total sales, that dealer represented 12% of total sales.
For fiscal 2023, our top five dealers accounted for approximately 35% of our consolidated revenues. During the year ended December 31, 2023, one individual dealer had sales of over 10% of our total sales, that dealer represented 10% of total sales.
Thus, FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit an investor’s ability to buy and sell our shares, have an adverse effect on the market for our shares and, thereby, depress their market prices. Volatility in our common shares price may subject us to securities litigation.
Thus, FINRA requirements may make it more difficult for broker-dealers to recommend that their customers buy our common shares, which may limit an investor’s ability to buy and sell our shares, have an adverse effect on the market for our shares and, thereby, depress their market prices.
Section 404(a) of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting, starting with the year ending December 31, 2022, and our management is required to report on the effectiveness of our internal control over financial reporting for such year.
Section 404(a) of the Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting and our management is required to report on the effectiveness of our internal control over financial reporting for such year.
For example, during the year ended December 31, 2022, one individual dealer had sales of over 10% of our total sales, and that one dealer represented 12% of total sales. During the year ended December 31, 2021, five dealers represented 67% of our sales.
For example, during the year ended December 31, 2023, one individual dealer had sales of over 10% of our total sales, and that one dealer represented 10% of total sales. During the year ended December 31, 2022, one dealer represented 12% of our sales.
Even if its patent applications issue into patents, these patents may be contested, circumvented or invalidated in the future. In addition, the rights granted under any issued patents may not provide us with adequate protection or competitive advantages.
Forza cannot assure that its pending applications will issue as patents. Even if its patent applications issue into patents, these patents may be contested, circumvented or invalidated in the future. In addition, the rights granted under any issued patents may not provide us with adequate protection or competitive advantages.
Other factors that may influence the adoption of electric boats include: ● perceptions about electric vehicle quality, safety, design, performance and cost; ● perceptions about the limited range over which electric boats may be driven on a single battery charge; ● perceptions about the total cost of ownership of electric boats, including the initial purchase price and operating and maintenance costs, both including and excluding the effect of any government and other subsidies and incentives designed to promote the purchase of electric boats; ● perceptions about the sustainability and environmental impact of electric boats, including with respect to both the sourcing and disposal of materials for electric vehicle batteries and the generation of electricity provided in the electric grid; ● the availability of other alternative fuel boats; ● improvements in the fuel economy of the internal combustion engine; ● the quality and availability of service for electric boats; ● volatility in the cost of oil and gasoline; ● government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; ● access to charging stations and cost to charge an electric vehicle and related infrastructure costs and standardization; ● the availability of tax and other governmental incentives to purchase and operate electric boats or future regulation requiring increased use of nonpolluting boats; and ● macroeconomic factors.
Other factors that may influence the adoption of electric boats include: ● perceptions about electric vehicle quality, safety, design, performance and cost; ● perceptions about the limited range over which electric boats may be driven on a single battery charge; ● perceptions about the total cost of ownership of electric boats, including the initial purchase price and operating and maintenance costs, both including and excluding the effect of any government and other subsidies and incentives designed to promote the purchase of electric boats; ● perceptions about the sustainability and environmental impact of electric boats, including with respect to both the sourcing and disposal of materials for electric vehicle batteries and the generation of electricity provided in the electric grid; ● the availability of other alternative fuel boats; ● improvements in the fuel economy of the internal combustion engine; ● the quality and availability of service for electric boats; ● volatility in the cost of oil and gasoline; ● government regulations and economic incentives promoting fuel efficiency and alternate forms of energy; ● access to charging stations and cost to charge an electric vehicle and related infrastructure costs and standardization; ● the availability of tax and other governmental incentives to purchase and operate electric boats or future regulation requiring increased use of nonpolluting boats; and ● macroeconomic factors. 37 The influence of any of the factors described above or any other factors may cause a general reduction in consumer demand for electric vehicles or Forza’s electric boats in particular, either of which would materially and adversely affect our business, results of operations, financial condition and prospects.
We may have to engage in common equity, debt, or preferred stock financing in the future. Your rights and the value of your investment in our securities could be reduced. Interest on debt securities could increase costs and negatively impacts operating results.
Risks Relating to Ownership of our Common Stock Terms of subsequent financings may adversely impact your investment. We may have to engage in common equity, debt, or preferred stock financing in the future. Your rights and the value of your investment in our securities could be reduced. Interest on debt securities could increase costs and negatively impacts operating results.
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 Forza may not have the resources to continue or expand the business operations of its electric-powered boats business. 33 Forza may be unable to adequately control the capital expenditures and costs associated with our business and operations.
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 Forza may not have the resources to continue or expand the business operations of its electric-powered boats business.
We and Forza may in the future become, subject to claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our or Forza’s employees’ former employers. Many of our and Forza’s employees were previously employed by other companies with similar or related technology, products or services.
Many of our and Forza’s employees were previously employed by other companies with similar or related technology, products or services. We and Forza are, and may in the future become, subject to claims that we, they or these employees have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of former employers.
While we do not believe that we are presently subject to any such liabilities, we cannot assure you that environmental conditions relating to our prior, existing, or future sites or operations or those of predecessor companies will not have a material adverse effect on our business or financial condition. 28 Our industry is characterized by intense competition, which affects our sales and profits.
While we do not believe that we are presently subject to any such liabilities, we cannot assure you that environmental conditions relating to our prior, existing, or future sites or operations or those of predecessor companies will not have a material adverse effect on our business or financial condition.
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.
We typically manufacture our gas-powered boats based upon indications of interest received from dealers who are not contractually obligated to purchase any boats.
Risks Related to our Electric-Powered Boats Forza’s planned fully electric sport boat has not yet been developed, and even if developed, interest in it may not develop. Forza, has not completed the design and engineering of the FX1 sport boat.
Risks Related to our Electric-Powered Boats Forza’s planned fully electric sport boat has not yet been developed, and even if developed, interest in it may not develop. Forza has not yet commercialized any boats.
During the year ended December 31, 2021, five individual dealers had sales of over 10% of our total sales and combined these five dealers represented 67% of total sales. The loss of a significant dealer could have a material adverse effect on our financial condition and results of operations.
During the year ended December 31, 2022, one individual dealer had sales of over 10% of our total sales and that dealer represented 12% of total sales. The loss of a significant dealer could have a material adverse effect on our financial condition and results of operations.
Securities litigation could result in substantial costs and liabilities and could divert management’s attention and resources. 46 Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
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. 22 Our ability to meet our manufacturing workforce needs is crucial to our results of operations and future sales and profitability.
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 .
In addition, if we need to raise more equity capital from the sale of common shares, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms of your investment. Common shares which we sell could be sold into any market which develops, which could adversely affect the market price.
In addition, if we need to raise more equity capital from the sale of common shares, institutional or other investors may negotiate terms at least as, and possibly more, favorable than the terms of your investment.
We face intense competition from other performance sport boat manufacturers in attracting and retaining dealers and customers, affecting our ability to attract or retain relationships with qualified and successful dealers and consumers looking to purchase boats.
We also compete with other manufacturers for employees. 29 We face increasing competition for dealers and have little control over their activities . We face intense competition from other performance sport boat manufacturers in attracting and retaining dealers and customers, affecting our ability to attract or retain relationships with qualified and successful dealers and consumers looking to purchase boats.
As a result, neither we nor Forza have the full benefit of patent or copyright laws to prevent others from replicating our or Forza’s products, product candidates and brands. We have not protected our intellectual property rights with respect to our gas-powered boats through patents or formal copyright registration, and we do not currently have any patent applications pending.
A significant portion of our and Forza’s intellectual property is not protected through patents or formal copyright registration. As a result, neither we nor Forza have the full benefit of patent or copyright laws to prevent others from replicating our or Forza’s products, product candidates and brands.
For instance, the demand for skilled employees has increased recently with the low unemployment rates in Florida where we have manufacturing facilities and in North Carolina where Forza is building a manufacturing facility. We anticipate increasing the number of employees that Forza will need to hire once the manufacturing facility in North Carolina is operational.
For instance, the demand for skilled employees has increased recently with the low unemployment rates in Florida where we have manufacturing facilities and in North Carolina where Forza is building a manufacturing facility.
On August 15, 2022, the closing price of our common stock on the Nasdaq was $7.94 per share, on December 19, 2022, the closing price of our common stock on the Nasdaq was $1.67 per share It is possible that an active trading market will not continue or be sustained, which could make it difficult for investors to sell their shares of our common stock at an attractive price or at all.
On January 20, 2023, the closing price of our common stock on the Nasdaq was $1.33 per share, on March 14, 2024, the closing price of our common stock on the Nasdaq was $1.12 per share It is possible that an active trading market will not continue or be sustained, which could make it difficult for investors to sell their shares of our common stock at an attractive price or at all.
Although Forza will attempt to remedy any issues it observes in its boats effectively and rapidly, such efforts may not be timely, may hamper production or may not be to the satisfaction of its customers. 38 Additionally, if Forza deploys updates to the software (whether to address issues, deliver new features or make desired modifications) and its over-the-air update procedures fail to properly update the software or otherwise have unintended consequences to the software, the software within its customers’ boats will be subject to vulnerabilities or unintended consequences resulting from such failure of the over-the-air update until properly addressed.
Additionally, if Forza deploys updates to the software (whether to address issues, deliver new features or make desired modifications) and its over-the-air update procedures fail to properly update the software or otherwise have unintended consequences to the software, the software within its customers’ boats will be subject to vulnerabilities or unintended consequences resulting from such failure of the over-the-air update until properly addressed.
Although we maintain property, casualty, and business interruption insurance of the types and in the amounts that we believe are customary for the industry, we are not fully insured against all potential natural disasters or other disruptions to our manufacturing facility. 25 If we fail to manage our manufacturing levels while still addressing the seasonal retail pattern for our products, our business and margins may suffer .
Although we maintain property, casualty, and business interruption insurance of the types and in the amounts that we believe are customary for the industry, we are not fully insured against all potential natural disasters or other disruptions to our manufacturing facility.
Also, negative public perceptions regarding the suitability of lithium-ion cells for boating applications, the social and environmental impacts of mineral mining or procurement associated with the constituents of lithium-ion cells, or any future incident involving lithium-ion cells, such as a vehicle or other fire, could materially and adversely affect Forza’s reputation and business, prospects, financial condition, results of operations, and cash flows. 36 The electronic vehicle (EV) industry and its technology are rapidly evolving and may be subject to unforeseen changes which could adversely affect the demand for Forza’s boats or increase Forza’s operating costs.
Also, negative public perceptions regarding the suitability of lithium-ion cells for boating applications, the social and environmental impacts of mineral mining or procurement associated with the constituents of lithium-ion cells, or any future incident involving lithium-ion cells, such as a vehicle or other fire, could materially and adversely affect Forza’s reputation and business, prospects, financial condition, results of operations, and cash flows.
Forza will require significant capital to develop and grow our business, including developing its first boat to be manufactured, the FX1, as well as building its brand.
Forza may be unable to adequately control the capital expenditures and costs associated with our business and operations. Forza will require significant capital to develop and grow our business, including developing its first boat to be manufactured, as well as building its brand.
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.
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. 45 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.
As a result, its ability to produce any boats will be limited to the available capacity of the Twin Vee facility until Forza’s future manufacturing facility is operational. If Twin Vee does not provide manufacturing capacity, it will not be able to produce its electric boats unless or until we lease or purchase facilities and equipment necessary for production purposes.
If Twin Vee does not provide manufacturing capacity, it will not be able to produce its electric boats unless or until we lease or purchase facilities and equipment necessary for our production purposes.
If securities analysts do not publish research or reports about our company, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline.
Common shares which we sell could be sold into any market which develops, which could adversely affect the market price. 44 If securities analysts do not publish research or reports about our company, or if they issue unfavorable commentary about us or our industry or downgrade our common stock, the price of our common stock could decline.
Competition is based primarily on brand name, price, product selection, and product performance. We compete with several large manufacturers that may have greater financial, marketing, and other resources than we do and who are represented by dealers in the markets in which we now operate and into which we plan to expand.
We compete with several large manufacturers that may have greater financial, marketing, and other resources than we do and who are represented by dealers in the markets in which we now operate and into which we plan to expand. We also compete with a variety of small, independent manufacturers.
Demand for recreational powerboat and electric powerboat sales depends to a large extent on general, economic and social conditions in a given market. Historically, sales of recreational powerboats decrease during economic downturns. We have fewer financial resources than more established powerboat manufacturers to withstand adverse changes in the market and disruptions in demand.
Demand for recreational powerboat and electric powerboat sales depends to a large extent on general, economic and social conditions in a given market. Historically, sales of recreational powerboats decrease during economic downturns.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn October of 2022, we signed a two-year lease agreement, on a 8,800 square foot warehouse facility in Old Fort, North Carolina to begin building our prototype engines. The monthly base rent will be $7,517 the first year, including taxes and common area maintenance, the lease required a $7,517 security deposit.
Biggest changeThe monthly base rent will be $7,517 the first year, including taxes and common area maintenance, the lease required a $7,517 security deposit. The bases rent will increase three (3%) on the anniversary of the annual term.
We have engaged in several building improvement projects during the last year. Forza currently shares our corporate headquarters. While we believe these headquarters are adequate for our current operations and needs, we do believe that the capacity at the facility will not be sufficient to support both our full scale production and Forza’s full scale production.
While Forza believe these headquarters and the leased facility are adequate for current operational needs, Forza does believe that the capacity at the facility will not be sufficient to support both Twin Vee’s full-scale production and our full-scale production.
Removed
Forza is currently designing a state-of-the-art manufacturing plant to be built in McDowell County, North Carolina as its future boat manufacturing facility. The initial phase of our new factory will be 50,000 square feet, that will have a capacity of 550 units annually. The site has been cleared and the rough grading is approximately 80% complete.
Added
We have engaged in several building improvement projects during the last year. Forza currently shares our corporate headquarters.
Removed
In August of 2022, Forza signed a six-month lease for a duplex, to be used by its employees to minimize travel expense as it started construction on its new manufacturing facility, for $2,200 per month, on a property in Black Mountain, North Carolina.
Added
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 of up to $1,367,100 over a twelve-year period to establish a new manufacturing plant in McDowell County, North Carolina.
Removed
The bases rent will increase three (3%) on the anniversary of the annual term.
Added
The receipt of grant funding is conditioned upon us 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. In October of 2022, Forza signed a two-year lease agreement, on a warehouse facility to begin building out our prototype engines.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless 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 4. Mine Safety Disclosures. Not applicable 48 PART II
Biggest changeRegardless 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 4. Mine Safety Disclosures. Not applicable 51 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePlan Category Number of Securities to be Issued upon Exercise of Outstanding Equity Compensation Plan Options* Weighted- Average Exercise Price of Outstanding Equity Compensation Plan Options Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in the first column) Equity compensation plans approved by security holders 1,283,571 4.14 65,429 Equity compensation plans not approved by security holders — Total 1,283,571 4.14 65,429 50 2021 Stock Incentive Plan See “Executive Compensation and Director Compensation—Employee Benefit and Stock Plans—2021 Stock Incentive Plan” in Part III, Item 10 for a description of the Twin Vee PowerCats Co. 2021 Stock Incentive Plan.
Biggest changePlan Category Number of Securities to be Issued upon Exercise of Outstanding Equity Compensation Plan Options* Weighted- Average Exercise Price of Outstanding Equity Compensation Plan Options Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in the first column) (1) Equity compensation plans approved by security holders 1,271,016 3.99 291,734 Equity compensation plans not approved by security holders — Total 1,271,016 3.99 291,734 (1) The maximum number of shares of common stock that may be issued under the 2021 Plan will automatically increase on January 1 of each calendar year for a period of ten years commencing on January 1, 2022 and ending on (and including) January 1, 2031, in a number of shares of common stock equal to 4.5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however that the board of directors may act prior to January 1 of a given calendar year to provide that the increase for such year will be a lesser number of shares of common stock. 53 2021 Stock Incentive Plan See “Executive Compensation and Director Compensation—Employee Benefit and Stock Plans—2021 Stock Incentive Plan” in Part III, Item 10 for a description of the Twin Vee PowerCats Co. 2021 Stock Incentive Plan.
Forza On August 12, 2022, we adopted the Forza X1, Inc. 2022 Stock Incentive Plan (the “2022 Plan”). The following table provides information, as of December 31, 2022 with respect to options outstanding under the 2022 Plan.
Forza On August 12, 2022, we adopted the Forza X1, Inc. 2022 Stock Incentive Plan (the “2022 Plan”). The following table provides information, as of December 31, 2023 with respect to options outstanding under the 2022 Plan.
The remaining planned use of proceeds has not changed since the initial public offering. Recent Sale of Unregistered Securities We did not sell any equity securities during the years ended December 31, 2022 and 2021 in transactions that were not registered under the Securities Act other than as disclosed in our filings with the SEC.
The remaining planned use of proceeds has not changed since the initial public offering. Recent Sale of Unregistered Securities We did not sell any equity securities during the years ended December 31, 2023 and 2022 in transactions that were not registered under the Securities Act other than as disclosed in our filings with the SEC.
Dividend Policy We did not pay a cash dividend during the 2022 or 2021 fiscal years. We presently intend to retain our earnings, if any, to finance the development and growth of our business and operations and do not anticipate declaring or paying cash dividends on our common stock in the foreseeable future.
Dividend Policy We did not pay a cash dividend during the 2023 or 2022 fiscal years. We presently intend to retain our earnings, if any, to finance the development and growth of our business and operations and do not anticipate declaring or paying cash dividends on our common stock in the foreseeable future.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock has traded on the Nasdaq Stock Market LLC under the symbol “VEEE” since July 21, 2021. The last price of our common stock as reported on the Nasdaq Capital Market LLC on March 28, 2023 was $1.85 per share.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock has traded on the Nasdaq Stock Market LLC under the symbol “VEEE” since July 21, 2021. The last price of our common stock as reported on the Nasdaq Capital Market LLC on March 20, 2024 was $1.23 per share.
Stockholders We have two classes of stock, undesignated preferred stock and $0.001 par value common stock. No shares of preferred stock have been issued or are outstanding. As of March 24 , 2023, we had 297 common stock stockholders of record.
Stockholders We have two classes of stock, undesignated preferred stock and $0.001 par value common stock. No shares of preferred stock have been issued or are outstanding. As of March 27 , 2024, we had 278 common stock stockholders of record.
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.
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.
Equity Compensation Plan Information Twin Vee On April 8, 2021, our board of directors and our stockholders approved the Twin Vee PowerCats Co. 2021 Stock Incentive Plan , as amended and restated on June 1, 0221 (the “2021 Plan”). The following table provides information, as of December 31, 2022 with respect to options outstanding under the 2021 Plan.
Issuer Purchases of Equity Securities There were no issuer purchases of equity securities during the years ended December 31, 2023 and 2022. Equity Compensation Plan Information Twin Vee On April 8, 2021, our board of directors and our stockholders approved the Twin Vee PowerCats Co. 2021 Stock Incentive Plan, as amended and restated on June 1, 2021 (the “2021 Plan”).
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.; (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 systems; and (v) the balance for working capital. 49 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.
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. 52 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.; (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 systems; and (v) the balance for working capital.
Plan Category Number of Securities to be Issued upon Exercise of Outstanding Equity Compensation Plan Options* Weighted- Average Exercise Price of Outstanding Equity Compensation Plan Options Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in the first column) Equity compensation plans approved by security holders 1,500,000 3.41 58,500 Equity compensation plans not approved by security holders — Total 1,500,000 3.41 58,500 2022 Stock Incentive Plan See “Executive Compensation and Director Compensation—Employee Benefit and Stock Plans—2022 Stock Incentive Plan” in Part III, Item 10 for a description of the Forza X1, Inc. 2022 Stock Incentive Plan.
Plan Category Number of Securities to be Issued upon Exercise of Outstanding Equity Compensation Plan Options* Weighted- Average Exercise Price of Outstanding Equity Compensation Plan Options Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in the first column) (1) Equity compensation plans approved by security holders 1,889,917 2.75 80,333 Equity compensation plans not approved by security holders — Total 1,889,917 2.75 80,333 (1) The maximum number of shares of common stock that may be issued under the 2022 Plan will automatically increase on January 1 of each calendar year for a period of ten years commencing on January 1, 2024 and ending on (and including) January 1, 2033, in a number of shares of common stock equal to 4.5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however that the board of directors may act prior to January 1 of a given calendar year to provide that the increase for such year will be a lesser number of shares of common stock.
Removed
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.
Added
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.
Removed
Issuer Purchases of Equity Securities There were no issuer purchases of equity securities during the years ended December 31, 2022 and 2021.
Added
The following table provides information, as of December 31, 2023 with respect to options outstanding under the 2021 Plan.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

44 edited+32 added−40 removed17 unchanged
Biggest changeWe do anticipate Forza’s expenses to increase during the next two years as it constructs its planned manufacturing facility in McDowell, North Carolina, the cost of which we expect will be paid for through the proceeds of Forza’s initial public offering, and certain grant funding, provided the conditions to receipt of the grant funding are met, of which there can be no assurance.
Biggest changeWe do anticipate Forza’s expenses to increase during the next year as it constructs its planned manufacturing facility in McDowell, North Carolina, the cost of which we expect will be paid for through the proceeds of Forza’s initial public offering, its secondary offering and certain grant funding, provided the conditions to receipt of the grant funding are met, of which there can be no assurance. 58 Cash Flow Years Ended December 31, 2023 2022 Change % Change Cash used in operating activities $ (6,934,773 ) $ (4,146,031 ) (2,788,742 ) (67 %) Cash used in investing activities $ (6,629,021 ) $ (195,605 ) 6,433,416 3,289 % Cash provided by financing activities $ 6,818,020 $ 20,867,340 (14,049,320 ) (67 %) Cash at end of year $ 16,755,233 $ 23,501,007 (6,745,774 ) (29 %) Cash Flow from Operating Activities For the year ended December 31, 2023, net cash flows used in operating activities was $6,934,773 compared to $4,146,030 during the year ended December 31, 2022.
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.
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, the 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.
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.
On an ongoing basis, we evaluate our estimates based on historical experience and make various assumptions, 59 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.
Liquidity and Capital Resources A primary source of funds for the year ended December 31, 2022 was net cash received from our secondary offering, as well as Forza’s initial public offering and revenue generated from operations.
Liquidity and Capital Resources A primary source of funds for the year ended December 31, 2023 was net cash received from our secondary offering, as well as Forza’s initial public and secondary offering and revenue generated from operations.
We currently primarily sell our boats through a current network of 20 independent boat dealers in 27 locations across North America and the Caribbean who resell our boats to the end user Twin Vee customers.
We currently primarily sell our boats through a current network of 43 independent boat dealers in locations across North America and the Caribbean who resell our boats to the end user Twin Vee customers.
The Company did not recognize any cumulative-effect adjustment to retained earnings upon adoption as the effect was immaterial. 56 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.
The Company did not recognize any cumulative-effect adjustment to retained earnings upon adoption as the effect was immaterial. 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 sheets.
We have additionally, launched the LFG Marine line of monohull boats which are expected to appeal to first-time boat buyers, the freshwater market, and consumers that prefer a monohull boat, increasing our potential customer base significantly across the nation and moving us outside on the niche catamaran market.
We have additionally, launched the AquaSport line of monohull boats which are expected to appeal to first-time boat buyers, 54 the freshwater market, and consumers that prefer a monohull boat, increasing our potential customer base across the nation and moving us outside on the niche catamaran market.
The following table provide selected financial data about us as of December 31, 2022 and December 31, 2021.
The following table provide selected financial data about us as of December 31, 2023 and December 31, 2022.
Under Topic 842, the Company applied a dual approach to all leases whereby the Company is a lessee and classifies leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the Company.
Under Topic 842, the Company applied a dual approach to all leases whereby the Company is a lessee and classifies leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the Company. Lease classification is evaluated at the inception of the lease agreement.
Basic and dilutive loss per share of common stock increased for the year ended December 31, 2022,to ($0.76) compared to ($0.19) for the year ended December 31, 2021.
Basic and dilutive loss per share of common stock increased for the year ended December 31, 2023 to ($0.76) compared to ($0.67) for the year ended December 31, 2022.
Company 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 16 gas-powered models in production ranging in size from our 24-foot, dual engine, center console to our newly designed 40-foot offshore 400 GFX.
Company 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 19 gas-powered models in production ranging in size from our 22-foot monohull to our newly designed 40-foot offshore 400 GFX.
We believe that our cash and cash equivalents will provide sufficient resources to finance operations for the next 12 months. 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 year.
In addition to cash, cash equivalents, restricted cash 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 year.
Our property, plant, and equipment along with prepaid expenses went up notably, as we have invested in additional boat molds for new model, equipment to support our increased production levels, and leasehold improvements to improve the quality of our products. 52 While we have largely returned to normal operations, the COVID-19 pandemic continues to cause challenges.
Our property, plant, and equipment along with prepaid expenses went up notably, as we have invested in additional boat molds for new model, equipment to support our increased production levels, and leasehold improvements to improve the quality of our products.
Depreciation expense for the year ended December 31, 2022 increased by 179%, or $355,227 to $553,750 for the year ended December 31, 2022 compared to $198,523 in December 31, 2021. Since our IPO in 2021 we have made significant investments in equipment, leasehold improvements and boat molds that resulted in an increased our depreciation expense.
Depreciation expense for the year ended December 31, 2023 increased by 144%, or $799,633 to $1,353,383 for the year ended December 31, 2023 compared to $553,750 in December 31, 2022. Since our IPO in 2021 we have made significant investments in equipment, leasehold improvements and boat molds that resulted in an increased our depreciation expense.
Included in salaries and wages for the year ended December 31, 2022 was a non-cash stock-based compensation expense of $1,448,751, which was an increase of $1,138,920 from the prior year, due to the issuance of options to employees. We have also incurred production and executive bonus expense increase of $39,083 for the year ended December 31, 2022.
Included in salaries and wages for the year ended December 31, 2023 was a non-cash stock-based compensation expense of $1,902,749, which was an increase of $453,997 from the prior year, due to the issuance of options to employees. We have also incurred production and executive bonus expense increase of $42,300 for the year ended December 31, 2023.
The Company accrues 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. The Company’s warranty reserve is calculated as the gross sales multiplied by the historical warranty expense return rate.
The Company accrues 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.
Research and design expenses for the year ended December 31, 2022, was $941,533 compared to $211,111, for the year ended December 31, 2021. These expenses are associated with our development of our electric propulsion system for Forza. We anticipate further increases in our research and design expense in 2023.
Research and design expenses for the year ended December 31, 2023, was $1,443,569 compared to $941,533, for the year ended December 31, 2022. These expenses are associated with our development of our electric propulsion system for Forza.
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 currently employe approximately 170 employees, 2022, some of whom have been with our company for over twenty years.
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 currently employe approximately 90 employees.
Our cost of benefits, primarily health insurance and 401K, increased by approximately $235,144, due to our increase in headcount. Expenses for board fees increased by $95,792 in 2022, during the year ended December 31, 2021 we only incurred board fees for a portion of the year for Twin Vee, and we did not incur any board fees for Forza.
Our cost of benefits, primarily health insurance, holiday pay and 401K, increased by approximately $178,996, due to our increase in headcount. Expenses for board fees increased by $60,375 in 2023, during the year ended December 31, 2022 we only incurred board fees for a portion of the year for Forza.
We have organized our business into three operating segments: (i) our gas-powered boat segment which manufactures and distributes gas-powered boats; (ii) our electric-powered boat segment which is developing fully electric boats, through our majority held subsidiary, 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. 51 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 have organized our business into three operating segments: (i) our gas-powered boat segment which manufactures and distributes gas-powered boats; (ii) our electric-powered boat segment which is developing fully electric boats, through our controlling interest subsidiary, 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.
December 31, December 31, 2022 2021 Cash and cash equivalents $ 23,501,007 $ 6,975,302 Marketable securities $ 2,927,518 $ 6,064,097 Current assets $ 29,887,529 $ 13,073,346 Current liabilities $ 3,791,063 $ 2,155,420 Working capital $ 26,096,466 $ 10,917,926 As of December 31, 2022, we had sufficient cash and cash equivalents to meet ongoing expenses for at least twelve months from the date of the filing of this Annual Report.
December 31, December 31, 2023 2022 Cash, cash equivalents and restricted cash $ 16,755,233 $ 23,501,007 Marketable securities $ 4,462,942 $ 2,927,518 Current assets $ 26,646,318 $ 29,887,529 Current liabilities $ 4,216,345 $ 3,791,063 Working capital $ 22,429,973 $ 26,096,466 As of December 31, 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 Annual Report.
Financial Condition Our consolidated balance sheet indicates a strong financial position as of December 31, 2022. We finished the year with revenue up 103% over the prior year. Our cash, cash equivalents and marketable securities were $26.4 million at December 31, 2022.
Financial Condition We finished the year with revenue up 4% over the prior year. Our cash, cash equivalents, restricted cash and marketable securities were $21 million at December 31, 2023.
As of December 31, 2022, we had $26,428,525 of cash, cash equivalents and marketable securities, total current assets of $29,887,529, and total assets of $38,231,480. Our total liabilities were $5,210,591.
As of December 31, 2022, we had $23,501,007 of cash, cash equivalents and restricted cash, marketable securities of $2,927,518, total current assets of $29,887,529 and total assets of $38,231,480. Our total current liabilities were $3,791,063 and total liabilities of $5,210,591 which included long-term operating lease liabilities for the lease of our facility.
We have spent much of the last two years assembling the tools and people necessary to increase production levels. While our revenue levels increased, our expenses also increased. That coupled with the additional expenses associated with being a public company and our research and development efforts for our electric boat division, resulted in a net loss for 2022.
While our revenue levels increased, our expenses also increased. Toward the end of 2023, market condition worsened, forcing us to close the Tennessee facility and consolidate operation in Fort Pierce. That coupled with the additional expenses associated with being a public company and our research and development efforts for our electric boat division, resulted in a net loss for 2023.
We incurred an increase in net loss in fair value of our marketable securities of $133,988, due to the poor financial market.
We incurred an increase in net gain in fair value of our marketable securities of $191,722, compared to a net loss in fair value of our marketable securities of $133,988 in 2022, due to improved financial market. Additionally, we recorded $909,215 in dividend income during 2023, compared to $0, in 2022.
Results of Operations Comparison of the Years Ended December 31, 2022 and 2021 The following table provides certain selected financial information for the years presented: Year Ended December 31, 2022 2021 Change % Change Net sales $ 31,987,724 $ 15,774,170 $ 16,213,554 103 % Cost of products sold $ 21,330,918 $ 9,498,384 $ 11,832,534 125 % Gross profit $ 10,656,806 $ 6,275,786 $ 4,381,020 70 % Operating expenses $ 16,678,514 $ 7,906,507 $ 8,772,007 111 % Loss from operations $ (6,021,708 ) $ (1,630,721 ) $ (4,390,987 ) 269 % Other income $ 228,294 $ 619,712 $ (391,418 ) (63 %) Net loss $ (5,793,414 ) $ (1,011,009 ) $ (4,782,405 ) 473 % Basic and dilutive loss per share of common stock $ (0.76 ) $ (0.19 ) $ (0.57 ) 301 % Weighted average number of shares of common stock outstanding 7,624,938 5,331,400 Net Sales and Cost Sales Our net sales increased $16,213,554, or 103% to $31,987,724 for the year ended December 31, 2022 from $15,774,170 for the year ended December 31, 2021.
Results of Operations Comparison of the Years Ended December 31, 2023 and 2022 The following table provides certain selected financial information for the years presented: Years Ended December 31, 2023 2022 $ Change % Change Net sales $ 33,425,912 $ 31,987,724 $ 1,438,188 4 % Cost of products sold $ 23,702,885 $ 21,330,918 $ 2,371,967 11 % Gross profit $ 9,723,027 $ 10,656,806 $ (933,779 ) (9 %) Operating expenses $ 21,710,326 $ 16,678,514 $ 5,031,812 30 % Loss from operations $ (11,987,299 ) $ (6,021,708 ) $ (5,965,591 ) 99 % Other income $ (2,205,103 ) $ (228,294 ) $ (1,976,809 ) 866 % Net loss $ (9,782,196 ) $ (5,793,414 ) $ (3,988,782 ) 69 % Basic and dilutive income per share of common stock $ (0.76 ) $ (0.67 ) $ (0.10 ) 15 % Weighted average number of shares of common stock outstanding 9,520,000 7,624,938 Net Sales and Cost Sales Our net sales increased $1,438,187, or 4% to $33,425,911 for the year ended December 31, 2023 from $31,987,724 for the year ended December 31, 2022.
Leases The Company 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.
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.
We continue to anticipate revenues from the sale of these fully integrated electric boats and motors to commence in late 2023. Forza will continue to build prototype engines and boats for the next six to nine months. In September of 2021 launched our wholly owned subsidiary, Fix My Boat Inc.
Forza is uncertain as to when it will obtain revenues from the sale of these fully integrated electric boats. Forza will continue to build and test prototype engines and boats for the next six to nine months. During the year ended December31, 2023, we saw a small increase in revenue.
CRITICAL ACCOUNTING ESTIMATES We believe that several accounting policies are important to understanding our historical and future performance.
The cash provided by financing activities for the year ended December 31,2022, included $20,936,825 in net proceeds from the Forza offering. CRITICAL ACCOUNTING ESTIMATES We believe that several accounting policies are important to understanding our historical and future performance.
We anticipate continued pressure on our gross profit percentage due to price increases on raw materials and purchased components. 53 Total Operating Expenses Our total operating expenses for the year ended December 31, 2022 and 2021 were $16,678,514 and $7,906,507 respectively. Operating expenses as a percentage of sales were 52% compared to 50% in the prior year.
Gross profit as a percentage of sales, for the year ended December 31, 2023 and 2022 was 29% and 33% respectively. We attribute the 4% decline in gross profit percentage to decreased demand in the marine sector. 56 Total Operating Expenses Our total operating expenses for the year ended December 31, 2023 and 2022 were $21,710,326 and $16,678,514 respectively.
The remaining increase of salaries and wages during the year ended December 31, 2021 was associated with payroll taxes and benefits. Professional fees increased by 154%, or $585,108 to $966,037 for the year ended December 31, 2022, compared to $380,928 for the year ended December 31, 2021.
During the years ended December 31, 2023 and 2022, respectively, we incurred $123,048 and $0 in commission expense. The remaining increase of salaries and wages during the year ended December 31, 2021 was associated with payroll taxes and benefits.
Our net loss from operation was $5,793,414, was decreased by non-cash expenses of approximately $2,593,713, primarily due to stock-based compensation of $1,448,751, depreciation of $553,750, change of right-of-use asset and lease liabilities of $397,136, net change in fair value of marketable securities of $133,988 and a loss on the disposal of assets of $60,088.
Our net loss was $9,782,196, was decreased by non-cash expenses of approximately $4,062,597 primarily due to stock-based compensation of $1,902,749, depreciation of $1,353,383, change of right-of-use asset and lease liabilities of $474,630, change in inventory reserve of $419,616 and net change in fair value of marketable securities of $87,781.
Selling, general and administrative expenses increased by approximately 60%, or $1,033,279 to $2,759,624 for the year ended December 31, 2022, compared to $1,726,345 for the year ended December 31, 2021.
Operating expenses as a percentage of sales were 65% compared to 52% in the prior year. Selling, general and administrative expenses increased by approximately 35%, or $974,781 to $3,734,406 for the year ended December 31, 2023, compared to $2,759,625 for the year ended December 31, 2022.
Our total liabilities were comprised of current liabilities of $3,791,063 which included accounts payable of $2,065,680 and accrued liabilities of $1,240,769, contract liability of $5,300 due to affiliated companies of $0 and current portion of operating lease right of use liability of $479,314, and long-term liabilities of $1,419,528.
Our total liabilities were comprised of current liabilities of $4,216,345 which included accounts payable and accrued liabilities of $3,474,538, contract liability of $44,195, finance lease liability of $214,715 and current portion of operating lease right of use liability of $482,897, and long-term liabilities of $3,580,753.
With these investments, we are building the foundation for our future, not only for our gas powered boats, but also for our electric boat division. We continue to deal with the fallout of the global pandemic, as well as the impact of additional costs of growth, but are encouraged by our continued increase in revenue.
With these investments, we are building the foundation for our future, not only for our gas powered boats, but also for our electric boat division. We have decreased our head count significantly and work to right size the business for the current state of the economy, while keep our core strengths intact.
The increase in salaries and wages of $4,263,341 was the result of aggressively ramping up of production, which required increasing our production and adding mid-level staff.
Salaries and wage related expenses increased by approximately 22%, or $2,472,011 to $13,929,580 for the year ended December 31, 2023, compared to $11,457,569 for the year ended December 31, 2022. The increase in salaries and wages of $1,458,260 was the result of aggressively ramping up of production, which required increasing our production and adding mid-level staff.
Cash Flow from Investing Activities During the year ended December 31, 2022, we used $195,605 for investment activities, compared to $8,037,264 used during the year ended December 31, 2021. We increased our property and equipment by $3,365,679, this was funded through the sales of investments of $3,002,591.
For the year ended December 31, 2023, our operating lease liabilities decreased $479,315 and our accrued liabilities decreased by $165,257. Contract liabilities increased by $38,895. Accounts receivable increased by $65,993. Cash Flow from Investing Activities During the year ended December 31, 2023, we used $6,629,021 for investment activities, compared to $195,605 used during the year ended December 31, 2022.
Numerous other items make up the remaining $124,689 of increased selling, general and administrative expense increase. Salaries and wage related expenses increased by approximately 113%, or $6,067,970 to $11,457,569 for the year ended December 31, 2022, compared to $5,389,599 for the year ended December 31, 2021.
We also saw an increase of $60,341 for the year ended December 31, 2023, for our workers compensation expense due to our increased employment levels. Numerous other items make up the remaining increase approximately $24,000 of increased selling, general and administrative expense increase.
We sold a thermoform machine for $175,000, in order to free up space for our manufacturing processes. Cash Flows from Financing Activities For the year ended December 31, 2022, net cash provided by financing activities was $20,867,340, compared to $16,068,289 during the year ended December 31, 2021.
We further spent $1,119,758 on the land in Tennessee and in North Carolina. We also spent approximately $714,991 on machinery and equipment. Cash Flows from Financing Activities For the year ended December 31, 2023, net cash provided by financing activities was approximately $6,818,021 compared to net cash provided by financing activities of $20,867,340 for the year ended December 31, 2022.
For the year ended December 31, 2022 we did see an increase in interest expense of $27,446.
For the year ended December 31, 2023 we did see an increase in interest expense of $57,002. 57 Net Loss Net loss for the year ended December 31, 2023, was $9,479,511, compared to $5,793,414 for the year ended December 31, 2022. We have spent much of the last two year assembling the tools and people necessary to increase production levels.
The 280 GFX remained consistent with 2021, while the 340 GFX increased from 3% in 2021 to 12% in 2022. Gross Profit Gross profits increased by $4,381,020, or 70% to $10,656,806 for the year ended December 31, 2022 from $6,275,786 for the year ended December 31, 2021.
In 2023, 40% of our sales or approximately $6,000,000, were attributed to our 220 monohull, Gross Profit Gross profits decreased by $933,779, or 9% to $9,723,027 for the year ended December 31, 2023 from $10,656,806 for the year ended December 31, 2022.
The number of boats sold during fiscal year ended December 31, 2022 increased 59% over the number of our boats sold during the fiscal year ended December 31, 2021.
The number of boats sold during fiscal year ended December 31, 2023 increased 21% over the number of our boats sold during the fiscal year ended December 31, 2022. However, our average cost per unit decreased approximately $26,000. In 2023, we introduced our monohull line of boats. These are low-cost entry-level boats, in a very competitive sector.
Other income decreased by 63%, or $391,418 to $228,294 for the year ended December 31, 2022, compared to $619,712 for the year ended December 31, 2021.
Other income increased by 866%, or $1,976,809 to $2,205,103 for the year ended December 31, 2023, compared to $228,294 for the year ended, 2022. The increase in other income is primarily the result of $1,267,055 in Employee Retention Credit income.
For the year ended December 31, 2022, our accounts payable and accrued liabilities increased $1,648,774, due to our increase in inventory. For the year ended December 31, 2022, our operating lease liabilities decreased $390,050. Prepaid expenses decreased by $21,339 and contract liabilities decreased by $8,800. Accounts receivable increased by $9,030.
For the year ended December 31, 2023, our accounts payable increased $333,346, due to our increase in inventory, prepaid expenses and other current assets decreases by $419,195, due to not being required to prepay for incoming engines, as we were in 2022.
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We believe that the boating industry will follow in the footsteps of the electrification of the automotive industry by creating electric boats that meet or exceed the traditional boating consumer’s expectations of price, value and run times.
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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.
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In other words, electric boats must offer a similar experience when compared to traditional gas-powered boats in terms of size, capability, and price point. To date, we have completed the design of the 25-foot FX dual console model, including hull, deck and small parts.
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Due to the growing demand for sustainable, environmentally friendly electric and alternative fuel commercial and recreational vehicles, Forza, is designing and developing a line of electric-powered boats. Forza’s electric boats are being designed as fully integrated electric boats including the hull, outboard motor and control system.
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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 28, 2022, the running surface of the boat and all major components were tested successfully for several hours on the Indian River Lagoon in Fort Pierce, Florida.
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To date, Forza X1 has built-out and tested multiple Forza company units, including: three offshore-style catamarans, two bay boat-style catamarans, one deck boat and three 22-foot center console (F22) monohulls. In addition, Forza has also electrified a pontoon boat for a major national pontoon manufacturer.
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While the motor and control systems have been successfully trialed previously, this was the first voyage including all major components, production batteries, fully functioning “alpha” engine design, control system - including 22” Garmin screen, and Osmosis telematics unit. The performance of the boat exceeded all expectations and will provide a great baseline for improvements, iterations, and design enhancements.
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Forza is in the process 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 control systems are continuously improved with each iteration.
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We ultimately reached over thirty miles per hour. Subsequent to the initial prototype boat, we have built four more prototypes: two more FX-style catamarans, one deck boat and one 22-foot center console monohull. The engine design and lower units and the control system cabling have been revamped and improved in each iteration.
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Cooling system improvements have also been prioritized and have yielded a myriad of benefits to runtime, speed, and range. Forza continues to iterate the engine design, including value engineering of parts and lightweighting of engine components. Forza is experimenting with our first 300 HP stacked motor design.
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The monohull will feature a single battery and the deck boat will, like the FX, utilize a two-battery system. The batteries and engines are liquid-cooled and unique improvements to the heat exchanges have improved performance. We have now completed our telematics unit design and we have a beta app on the Apple app store.
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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. The average selling price of our units did decrease by 16%, for the year ended December 31, 2023, to approximately $137,692.
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This will allow for remote monitoring of all of the parameters of the battery and engine for both the end user and the factory. Additionally, we have improved our user interface through the Garmin control screen to provide well-designed pages showing operating characteristics and conformance to control parameters.
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This is due to the inclusion of our monohull boats which have an average selling price of approximately $62,000 per unit. The addition of the monohull boat accounted for 18% of our total sales for the year ended December 31, 2023.
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Fix My Boat, will be the first nationally branded, mobile marine service company utilizing a franchise model for marine mechanics across the country.
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Recent Developments On April 20, 2023 we incorporated AquaSport Co., a wholly owned subsidiary, in the state of Florida in connection with our plan to lease the AQUASPORT™ boat brand and manufacturing facility in White Bluff, TN.
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We have not experienced material adverse effects on our business due to increasing inflation, it has raised operating costs for many businesses and, in the future, could impact demand for our products, foreign exchange rates or employee wages.
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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, TN, related tooling, molds, and equipment to build five AquaSport models ranging in size from 21 to 25-foot boats (the “AquaSport Assets”).
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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.
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Under the agreement, AquaSport Co. 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 us and $16,000 a month for any rent paid under the Agreement by AquaSport Co. to Ebbtide.
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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 markets may have the effect of further increasing economic uncertainty may impact consumer spending for products like our.
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AquaSport Co. will lease the AquaSport assets from Ebbtide under the agreement at a monthly rent of $22,000 pending AquaSport Co.’s acquisition of the AquaSport assets.
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During fiscal 2022, we experienced supply chain disruptions and an overall increase in the price of raw materials and other components used in our production. We also incurred higher labor costs and challenges to fill open positions due to a highly competitive job market.
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The lease is for a term of five years, commencing June 1, 2023, with one option to renew the lease for an additional five years. 55 The White Bluff, TN, AquaSport facility was opened to produce the AquaSport legacy line of monohull boats.
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Additionally, we experienced periodic operational disruptions as our employees contracted or were potentially exposed to COVID-19 pandemic, we are unable to predict the impact the pandemic may have on our future results of operations or financial condition.
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While there was interest in the legacy models, we’ve seen light demand for these models from our dealer network and customers. We’ve seen much higher demand for the newly designed AquaSport models currently manufactured in our Fort Pierce, FL, facility.
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We attribute the large increase in net sales to a continued strong economy during 2022, along with our investment in the growth of our sales and marketing assets throughout 2022. That paired with our ability to increase our production capacity by over 100% year over year.
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Lower demand for these legacy models, coupled with the current economic headwinds in the boating industry, led us to close the Tennessee facility in November 2023, and to consolidate its manufacturing operations in our Florida facility.
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Additionally, we have increased our sale prices to help offset the increases in operating expenses, which includes increased labor cost, in addition to increased inventory levels due to the additional models we now produce and to protect against supply chain shortages.
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We remain dedicated to the AquaSport brand and will continue to design and produce new models, including the 240 CC which is now available for sale, and the 280 CC, which will be available over the next quarter.
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Our average revenue per unit for the year ended December 31, 2022 is up approximately 31% over revenue per unit for the year ended December 31, 2021. The average revenue per unit increase, is not only due to our increase in sales prices, but we also attribute this increase to a shift in our model mix.
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In late December 2023, One Water informed us that they were going to discontinue some of their relationships with manufactures, and Twin Vee was one of those relationships. We have found that One Water struggled to achieve sales of our Twin Vee production line due to their unfamiliarity with powered catamarans.
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In 2021 our sales were spread evenly across our 26 and 31 Classics and our 24 and 28 GFX models. In 2022, we discontinued the remaining Twin Vee Classic lines and made the 260 and 340 GFX models available. We saw sales across all models increase in 2022.
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We continue to work with OneWater to help them connect and sell units to end users. We have also started working with dealers that are experienced with our products and have proven to be successful in understanding the benefits of our products and how to achieve sales.
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We did see a shift back to sales on our smallest unit, the 240 GFX, which accounted for approximately 40% of our total sales, compared to 25% in 2021. The 260 GFX, went from approximately 27% of our total sales, down to 18% in 2022.
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We believe that adding a full line up of monohull boats will allow us to continue to increase our net sales year over year.

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