Twin Vee PowerCats Co
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
VEEE$8.27+1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001731122-24-000812
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001731122-24-001254
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 68 previous paragraphs and 88 current paragraphs.
42 unchanged; 22 reworded; 18 added; 4 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 3 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (18)
Current report
On July 12, Karl Zimmer was appointed as our President of Twin Vee PowerCats Co. This strategic leadership change will enable Joseph Visconti, the current CEO who until the appointment also served as President, to dedicate his efforts towards expanding the Company’s business, developing potential mergers and acquisitions, enhancing sales and marketing strategies, expanding investor relations, and steering the long-term vision of Twin Vee. In this role, Mr. Zimmer reports to the Company’s Chief Executive Officer and Chairman of the Board.
Current report
On August 12, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Forza and Twin Vee Merger Sub, Inc., a Delaware corporation and our wholly owned subsidiary (“Merger Sub”), pursuant to which, among other things, subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Forza will merge with and into Merger Sub, with Forza surviving the merger (the “Merger”). The Merger is intended to qualify for federal income tax purposes as a tax-free reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended. Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each outstanding share of Forza common stock (other than any shares held by us), will be converted into the right to receive 0.61166627 shares (the “Exchange Ratio”) of our common stock, any fractional shares to be rounded down to the nearest whole share of common stock, for an aggregate of 5,355,000 shares of our common stock. Each outstanding stock option exercisable for shares of Forza common stock that is outstanding at the Effective Time, whether vested or unvested, will be assumed by us and converted into a stock option to purchase the number of shares of our common stock that the holder would have received if such holder had exercised such stock option for shares of Forza common stock prior to the Merger and exchanged such shares for our common stock in accordance with the Exchange Ratio. Each outstanding warrant to purchase shares of Forza common stock will be assumed by us and converted into a warrant to purchase the number of shares of our common stock that the holder would have received if such holder had exercised such warrant for shares of Forza common stock prior to the Merger and exchanged such shares for shares of our common stock in accordance with the Exchange Ratio, subject to adjustment for any reverse stock split. In addition, at the Effective Time the 7,000,000 shares of Forza common stock held by us will be cancelled.
Current report
The completion of the Merger by each of us and Forza is subject to customary conditions, including (1) (A) adoption of the Merger Agreement by Forza’s stockholders (which approval shall include a majority of the shares present in person or by proxy at the Forza annual meeting excluding shares held by us) and (B) approval of the Share Issuance by our shareholders, (2) authorization for listing on the Nasdaq Capital Market of the shares of our common stock to be issued in the Merger, subject to official notice of issuance, (3) effectiveness of the registration statement on Form S-4 for our common stock to be issued in the Merger, and (4) the absence of any order, injunction, decree or other legal restraint preventing the completion of the Merger or making the completion of the Mergers illegal. Each party’s obligation to complete the Mergers is also subject to certain additional customary conditions, including subject to certain exceptions, the accuracy of the representations and warranties of the other party and performance in all material respects by the other party of its obligations under the Merger Agreement. In our capacity as a principal stockholder of Forza, we have agreed to vote the shares of Forza common stock held by us for the approval and adoption of the Merger only if a majority of the other stockholders of Forza present in person or by proxy at the Forza annual meeting vote to approve and adopt the Merger.
Current report
The Merger Agreement contains certain termination rights for both Forza and us. In addition, either we or Forza may terminate the Merger Agreement if the Merger is not consummated by December 1, 2024.
Current report
Gross profits decreased by $733,375 or 78% to $202,340 for the three months ended June 30, 2024 from $935,715 for the three months ended June 30, 2023. Gross profit as a percentage of sales, for the three months ended June 30, 2024 and 2023, was 5% and 12% respectively. On a sequential basis, gross profit as a percentage of revenues was down slightly at 4.7% in the second quarter of 2024 compared to 5.3% in the first quarter of 2024 despite a reduction in revenues of $949,522 between the same periods. Through continuous efficiency improvements, we were able to effectively offset most of the impact of fixed cost deleveraging in the production facility. We continue to right size the workforce and drive efficiency in all parts of our cost structure.
Current report
Research and development expenses increased by $83,811, or 56%, to $344,784 for the three months ended June 30, 2024, from $261,473 for the three months ended June 30, 2023. This increase was due primarily to the charges for an inventory allowance related to R&D Cascadia electric motors at Forza, partially offset by lower
Current report
R&D activity.
Current report
Comparison of the Six Months Ended June 30, 2024 and 2023
Current report
Gross Profit
Current report
Gross profits decreased by $2,065,620 or 81% to $479,653 for the six months ended June 30, 2024 from $2,545,273 for the six months ended June 30, 2023. Gross profit as a percentage of sales, for the six months ended June 30, 2024 and 2023, was 5% and 15% respectively. Through continuous efficiency improvements, the company was partially able to offset the impact of fixed cost deleveraging in the production facility as revenues declined 44% over the same period last year. We continue to right size the workforce and drive efficiency in all parts of our cost structure.
Current report
Total Operating Expenses
Current report
During the six months ended June 30, 2024, operating expenses were $7,681,934 and included an impairment charge of $1,674,000 related to the Forza impairment of property & equipment. Before the impact of this charge, operating expenses for the six months ended June 30, 2024 and 2023 were $6,007,934 and $7,959,023 respectively. Operating expenses as a percentage of sales were 62.6% compared to 46.8% in the prior year. Our total operating expenses, for our gas-powered boat segment, for the six months ended June 30, 2024 and 2023 were $3,478,677 and $4,299,093 respectively. Before the impact of the impairment charge, as a percentage of net sales, for the six months ended June 30, 2024 and 2023, operating expenses for our gas-powered segment were 36.2% and 42.6%, respectively. Our total operating expenses for Forza, our electric powered boat and development segment, for the six months ended June 30, 2024 and 2023 were $4,202,330 and $3,658,531, respectively.
Current report
Selling, general, and administrative expenses decreased by approximately 25%, or $487,208 to $1,452,687 for the six months ended June 30, 2024, compared to $1,937,120 for the six months ended June 30, 2023. The largest drivers of the decrease were reductions in sales and marketing expenses, D&O insurance, hiring costs and office supplies, primarily resulting from the decline in R&D activity at Forza between periods.
Current report
Research and development expenses decreased by $469,646, or 49%, to $494,475 for the six months ended June 30, 2024, from $964,121 for the six months ended June 30, 2023. This decrease was due primarily to the charges for an inventory allowance related to R&D Cascadia electric motors at Forza, more than offset by lower
Current report
R&D activity in the Forza electric motor segment.
Current report
Professional fees decreased by 1% or $7,330 to $707,692 for the six months ended June 30, 2024, compared to $715,022 for the six months ended June 30, 2023.
Current report
Other income decreased by $1,333,652 to $347,890 for the six months ended June 30, 2024, as compared to $1,681,542 for the six months ended June 30, 2023. This decrease was due to the first half of 2023 recognition of income from the Employee Retention Credit of $1,267,055.
Removed paragraphs (4)
Previous report
On March 4, 2024, Carrie Gunnerson, our Chief Financial Officer notified us of her decision to resign, effective May 31, 2024, from her position as the our Chief Financial Officer to pursue another opportunity. Ms. Gunnerson informed the Company that she will support and ensure a smooth transition. Ms. Gunnerson did not advise us of any disagreement with us on any matter relating to our operations, policies or practices.
Previous report
On March 6, 2024, James Leffew, the Chief Executive Officer of the Forza X1, Inc. notified Forza of his decision to resign, effective immediately, from his position as Forza’s Chief Executive Officer. Mr. Leffew informed Forza that he will support and ensure a smooth transition. Mr. Leffew did not advise Forza of any disagreement with Forza on any matter relating to its operations, policies or practices.
Previous report
Gross profits decreased by $1,332,244 or 83% to $277,313 for the three months ended March 31, 2024 from $1,609,558 for the three months ended March 31, 2023. Gross profit as a percentage of sales, for the three months ended March 31, 2024 and 2023, was 5% and 18% respectively. The model mix has changed significantly in the first quarter compared to the prior year, shifting from our traditional catamarans to our new 220 monohulls. This has put downward pressure on our gross profits for the quarter. We have recently entered into the monohull market which is highly competitive. As we move forward the model mix between monohull and catamarans is expected to continue to have an impact on our gross profit. We did take actions to significantly reduce production labor and reduce discretionary spending which has favorably impacted the results of operations for the quarter ended March 31, 2024.
Previous report
Research and development expenses declined by $552,957, or 79%, to $149,691 for the three months ended March 31, 2024, from $702,648 for the three months ended March 31, 2023. Part of the use of proceeds from Forza’s initial public offering (“IPO”) was the development of an electric boat and an electric motor, the expense for which was higher in the early phases of development.
Reworded paragraphs (22)
Previous wording
During the first quarter of 2024, we experienced a significant reduction in demand for our products, as has been experienced throughout the boating industry. Total units sold in the quarter were 32 compared to 54 in the first quarter of 2023, a 41% reduction, in line with the 41% reduction in revenue over the same period. Our company’s objectives have been to add new, larger boat models including a new line of GFX2 models, expand our dealers and distribution network, and increase unit production to fulfill our customer and dealer orders. We have also added our monohull line, shipping our first model of the monohull, the 22-foot, in February of 2023. The combination of fewer but larger Twin Vee units combined with the new monohull models resulted in a flat average selling price in the first quarter of 2024 compared to the prior year quarter.
Current wording
During the second quarter of 2024, we experienced a significant reduction in demand for our products, as has been experienced throughout the boating industry. Total units sold in the quarter were 24 compared to 75 in the second quarter of 2023, a 68% reduction, compared to a 47% reduction in revenue over the same period. This difference is due to the average selling price per unit in each quarter. Sales for the second quarter of 2024 included 2 40’ boats with an average selling price of $630,000 each while the second quarter of 2023 had 0 40’ foot boats. Our company’s objectives have been to add new, larger boat models including a new line of GFX2 models, expand our dealers and distribution network, and increase unit production to fulfill our customer and dealer orders.
Previous wording
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. Our electric boats are being designed as fully integrated electric boats including the hull, outboard motor and control system. 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. The past year has seen a marked deceleration in the global demand for recreational marine vehicles, influenced heavily by economic uncertainties and shifting consumer priorities. This slowdown reflects broader trends affecting the recreational vehicle industries at large, including electric vehicles (EVs). Notably, the global shift towards EV adoption has been much slower than initially anticipated. Several leading automotive manufacturers have adjusted their strategies, accordingly, including halting the construction of dedicated EV factories.
Current wording
Due to the growing demand for sustainable, environmentally friendly electric and alternative fuel commercial and recreational vehicles, Forza, entered the business of designing and developing a line of electric-powered boats. Our electric boats are being designed as fully integrated electric boats including the hull, outboard motor and control system. 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. The past year has seen a marked deceleration in the global demand for recreational marine vehicles, influenced heavily by economic uncertainties and shifting consumer priorities. This slowdown reflects broader trends affecting the recreational vehicle industries at large, including electric vehicles (EVs). Notably, the global shift towards EV adoption has been much slower than initially anticipated. Several leading automotive manufacturers have adjusted their strategies, accordingly, including halting the construction of dedicated EV factories.
Previous wording
The slower-than-expected adoption rates have led to cautious consumer spending and investment in EV technology, directly impacting the Company’s market. Specifically, the electric boat segment has experienced even more sluggish growth than the automotive sector. In addition, while Forza’s electric boats are still in the development stage, many of the larger players in the boat industry, such as Mercury Marine, have completed their development efforts and have brought their electric outboard motors to market. Despite these challenges, we have managed to sustain operations through strategic adjustments, including cost management and a focus on strategic partnerships. We have implemented measures that have reduced cash burn and conserved cash reserves while seeking to leverage our technological advancements through strategic collaborations and partnerships to enhance shareholder value. We have responded to the industry challenges by tightening our financial reins to mitigate the impacts of reduced demand with a view toward long-term sustainability.
Current wording
The slower-than-expected adoption rates have led to cautious consumer spending and investment in EV technology, directly impacting the Company’s market. Specifically, the electric boat segment has experienced even more sluggish growth than the automotive sector. In addition, many of the larger players in the boat industry, such as Mercury Marine, have completed their development efforts and have brought their electric outboard motors to market. Despite these challenges, we have managed to sustain operations through strategic adjustments, including cost management and a focus on strategic partnerships. We have implemented measures that have reduced cash burn and conserved cash reserves while seeking to leverage our technological advancements through strategic collaborations and partnerships to enhance shareholder value. We have responded to the industry challenges by tightening our financial reins to mitigate the impacts of reduced demand with a view toward long-term sustainability. In an effort to further retain cash and reduce expenditures and as a result of current market conditions, on July 11, 2024, the Board of Directors of Forza X1, Inc. (the “Company”) determined to discontinue and wind down the Company’s business related to the development and sale of electric boats utilizing its proprietary outboard electric motor. The Company intends to explore strategic alternatives, including a potential merger with Twin Vee PowerCats Co.
Previous wording
On April 9, 2024, our Board of Directors appointed Michael P. Dickerson to serve as our Chief Financial & Administrative Officer.. Mr. Dickerson, age 57, has 35 years of corporate experience in senior and executive level finance and operational roles, including finance & accounting, treasury, investor relations & corporate communications, risk management and other related roles.
Current wording
On April 9, 2024, Michael P. Dickerson was appointed to serve as our Chief Financial & Administrative Officer. Mr. Dickerson, age 57, has 35 years of corporate experience in senior and executive level finance and operational roles, including finance & accounting, mergers & acquisitions, treasury, investor relations & corporate communications, risk management and other related roles. In this role, Mr. Dickerson reports to the Company’s Chief Executive Officer and Chairman of the Board.
Previous wording
Our net sales decreased by $3,600,872, or 41% to $5,276,343 for the three months ended March 31, 2024 from $8,877,215 for the three months ended March 31, 2023. This decrease was due to a decrease in the number of boats sold during the three months ended March 31, 2024 and the mix of boats sold, including the addition of a monohull line of boats, which have a much lower average price than our dual-hull boats. The number of boats sold during the three months ended March 31, 2024 decreased 39% compared to the three months ended March 31, 2023.
Current wording
Our net sales decreased by $3,797,811, or 47% to $4,326,821 for the three months ended June 30, 2024 from $8,124,632 for the three months ended June 30, 2023. This decrease was due to a decrease in the number of boats sold during the three months ended June 30, 2024 and the mix of boats sold, including the addition of a monohull line of boats, which have a much lower average price than our dual-hull boats. The number of boats sold during the three months ended June 30, 2024 decreased 68% compared to the three months ended June 30, 2023.
Previous wording
During the three months ended March 31, 2024, we also took actions to significantly reduce operating expenses. Our total operating expenses for the three months ended March 31, 2024 and 2023 were $2,820,520 and $3,979,081 respectively. Operating expenses as a percentage of sales were 52.4% compared to 44.8% in the prior year. Our total operating expenses, for our gas-powered boat segment, for the three months ended March 31, 2024 and 2023 were $1,533,981 and $1,898,151 respectively. As a percentage of net sales, for the three months ended March 31, 2024 and 2023, operating expenses for our gas-powered segment were 29.1% and 21.4%, respectively. Our total operating expenses for Forza, our electric powered boat and development segment, for the three months ended March 31, 2024 and 2023 were $1,285,767 and $2,079,809, respectively.
Current wording
During the three months ended June 30, 2024, operating expenses were $4,861,416 and included an impairment charge of $1,674,000 related to the Forza impairment of property & equipment. Before this charge operating expenses for the three months ended June 30, 2024 and 2023 were $3,187,416 and $3,979,942 respectively. Operating expenses as a percentage of sales excluding the impairment charge were 73.7% compared to 49.0% in the prior year. Our total operating expenses, for our gas-powered boat segment, for the three months ended June 30, 2024 and 2023 were $1,943,927 and $2,400,942 respectively. As a percentage of net sales, for the three months ended June 30, 2024 and 2023, operating expenses for our gas-powered segment were 44.9% and 29.6%, respectively. Our total operating expenses for Forza, our electric powered boat and development segment, for the three months ended June 30, 2024 and 2023 were $2,916,563 and $1,578,722, respectively.
Previous wording
Selling, general, and administrative expenses decreased by approximately 32%, or $328,736 to $693,954 for the three months ended March 31, 2024, compared to $1,022,690 for the three months ended March 31, 2023. The largest drivers of the decrease were reductions in sales and marketing expenses, hiring costs and travel and entertainment costs and office supplies. Sales and marketing expenses decreased by $88,513, from $125,039 for the three months ended March 31, 2023, to $36,526 for the three months ended March 31, 2024. Hiring expenses declined $49,463 for the three months ended March 31, 2024 to $1,610 compared to $51,073 in the first quarter of 2023. Travel and entertainment expenses declined $72,823 in the first quarter of 2024 to $41,262 compared to $114,085 in the first quarter of 2023. Office supplies expenses declined $38,084 in the first quarter of 2024 to $3,991 compared to $42,075 in the first quarter of 2023.
Current wording
Selling, general, and administrative expenses decreased by approximately 17%, or $158,471 to $755,959 for the three months ended June 30, 2024, compared to $914,430 for the three months ended June 30, 2023. The largest drivers of the decrease were reductions in sales and marketing expenses, hiring costs and office supplies. Sales and marketing expenses decreased by $114,122, from $127,580 for the three months ended June 30, 2023, to $241,702 for the three months ended June 30, 2024. Hiring expenses declined $11,910 for the three months ended June 30, 2024 to $7,066 compared to $18,976 in the second quarter of 2023. Office supplies expenses declined $24,022 in the second quarter of 2024 to $11,766 compared to $35,788 in the second quarter of 2023.
Previous wording
Salaries and wage related expenses decreased 25%, or $441,481 to $1,296,269 for the three months ended March 31, 2024, compared to $1,737,750 for the three months ended March 31, 2023. The majority of the decrease is due to reductions in staffing levels at Forza, as well as the staffing of Aquasport. Included in salaries and wage related expenses for the three months ended March 31, 2024 was stock-based compensation expense of $426,283, Forza’s portion of that expense being $293,141. In total, stock-based compensation expense decreased by $56,682 or 11.7% as compared to the prior year period.
Current wording
Salaries and wage related expenses decreased 43%, or $902,824 to $1,199,348 for the three months ended June 30, 2024, compared to $2,102,172 for the three months ended June 30, 2023. The majority of the decrease is due to reductions in staffing levels at Forza, as well as the staffing of Aquasport. Included in salaries and wage related expenses for the three months ended June 30, 2024 was stock-based compensation expense of $317,743, Forza’s portion of that expense being $183,815. In total, stock-based compensation expense decreased by $171,617 or 35.1% as compared to the prior year period.
Previous wording
Professional fees decreased by 14%, or $42,392 to $255,325 for the three months ended March 31, 2024, compared to $297,717 for the three months ended March 31, 2023. This decrease was due primarily to higher legal and consulting expenses in the prior year related to the Forza development.
Current wording
Professional fees increased by 8% or $35,062 to $452,367 for the three months ended June 30, 2024, compared to $417,305 for the three months ended June 30, 2023. This increase was due primarily to higher legal and consulting expenses in the current year related to exploration of strategic options at Forza.
Previous wording
Depreciation and amortization expense increased by 95%, or $207,005 to $425,281 for the three months ended March 31, 2024, as compared to $218,2762 for the three months ended March 31, 2023. This increase is due to the addition of fixed assets, primarily molds, to increase our production levels and throughput.
Current wording
Depreciation and amortization expense increased by 53%, or $150,396 to $434,958 for the three months ended June 30, 2024, as compared to $284,563 for the three months ended June 30, 2023. This increase is due to the addition of fixed assets, primarily molds, to increase our production levels and throughput.
Previous wording
Other income decreased by $333,046 to $208,012 for the three months ended March 31, 2024, as compared to $541,058 for the three months ended, March 31, 2023. This decrease was due to the first quarter 2023 recognition of income from the Employee Retention Credit of $329,573.
Current wording
Other income decreased by $1,000,604 to $139,880 for the three months ended June 30, 2024, as compared to $1,140,484 for the three months ended June 30, 2023. This decrease was due to the second quarter 2023 recognition of income from the Employee Retention Credit of $937,482.
Previous wording
Net loss for the three months ended March 31, 2024 was $2,355,194, as compared to $1,828,465 for the three months ended March 31, 2023, an increase of $506,729. Our electric segment, which does not generate any revenue at this time, incurred a loss of $1,167,837 for the three months ended March 31, 2024, related mostly to staffing costs, and to a lesser extent, research and development. Our gas-powered segment incurred a loss of $1,163,957 for the three months ended March 31, 2024, due largely to the rapid decline in orders for new boats during the first quarter which resulted in a right-sizing of the production labor pool during the first quarter. Basic and dilutive loss per share of common stock for the three months ended March 31, 2024 was ($0.18), as compared to ($0.12) for the three months ended March 31, 2023.
Current wording
Net loss for the three months ended June 30, 2024 was $4,519,194, as compared to $1,903,743 for the three months ended June 30, 2023, an increase in loss of $2,615,451. Our electric segment, which does not generate any revenue at this time, incurred a loss of $2,831,554 for the three months ended June 30, 2024, related mostly to staffing costs and research and development. Our gas-powered segment incurred a loss of $1,681,418 for the three months ended June 30, 2024, due largely to the rapid decline in orders for new boats during the first half of 2024. Basic and dilutive loss per share of common stock for the three months ended June 30, 2024 was ($0.31), as compared to ($0.14) for the three months ended June 30, 2023.
Previous wording
A primary source of funds for the year ended December 31, 2023 and through March 31, 2024 was net cash received from our secondary offering, as well as Forza’s initial public and secondary offering and revenue generated from operations. Our primary use of cash was related to funding the expansion of our operations through capital improvements, as well as molds for the expansion of Aquasport and Twin Vee models. With reduced demand offsetting uncertainty on certain component availability, prolonged lead time and rising prices, we had been selectively reducing inventory levels. Our priority over the next several months is to expand the Twin Vee GFX 2 lineup which will require additional investment in molds and machinery.
Current wording
A primary source of funds for the year ended December 31, 2023 and through June 30, 2024 was net cash received from our secondary offering, as well as Forza’s initial public and secondary offering and revenue generated from operations. Our primary use of cash was related to funding the expansion of our operations through capital improvements, as well as molds for the expansion of Aquasport and Twin Vee models. With reduced demand offsetting uncertainty on certain component availability, prolonged lead time and rising prices, we had been selectively reducing inventory levels. Our priority over the next several months is to reduce production costs and labor to match market demand, complete Twin Vee facility expansion and efficiency project and continue to expand the Twin Vee GFX 2 lineup which will require additional investment in molds and machinery.
Previous wording
As of March 31, 2024, we had $16,137,920 of cash, cash equivalents, and restricted cash, $982,604 of marketable securities, total current assets of $21,778,752, and total assets of $36,454,352. Our total liabilities were $6,313,649. Our total liabilities were comprised of current liabilities of $2,896,963 which included accounts payable and accrued liabilities of $2,192,068, leases liability of $683,447, contract liability of $21,448 and long-term liabilities of $3,416,686. As of December 31, 2023, we had $16,497,703 of cash, cash equivalents, and restricted cash, $4,462,942 of marketable securities, total current assets of $26,646,318 and total assets of $39,846,713. Our total current liabilities were $4,216,345 and total liabilities of $7,797,098 which included long-term finance and operating leases liabilities of $3,080,853.
Current wording
As of June 30, 2024, we had $14,138,337 of cash, cash equivalents, and restricted cash, $995,208 of marketable securities, total current assets of $19,582,107 and total assets of $35,427,305. Our total liabilities were $7,814,053. Our total liabilities were comprised of current liabilities of $4,560,560 which included accounts payable and accrued liabilities of $3,887,426, leases liability of $666,959, contract liability of $6,175 and long-term liabilities of $3,253,493. As of December 31, 2023, we had $16,497,703 of cash, cash equivalents, and restricted cash, $4,462,942 of marketable securities, total current assets of $26,646,318 and total assets of $39,846,713. Our total current liabilities were $4,216,345 and total liabilities of $7,797,098 which included long-term finance and operating leases liabilities of $3,080,853.
Previous wording
The accumulated deficit was $16,033,213 as of March 31, 2024 compared to accumulated deficit of $14,346,984 as of December 31, 2023.
Current wording
The accumulated deficit was $18,247,096 as of June 30, 2024 compared to accumulated deficit of $14,346,984 as of December 31, 2023.
Previous wording
Our working capital decreased by $3,548,183 to $18,881,789 as of March 31, 2024, compared to $22,429,972 on December 31, 2023 primarily due to continued development efforts at Forza which isa non-revenue generating entity at the moment, the ongoing construction of the new Forza manufacturing facility and investments in molds for new boat designs.
Current wording
Our working capital decreased by $7,408,426 to $15,021,547 as of June 30, 2024, compared to $22,429,972 on December 31, 2023 primarily due to continued development efforts at Forza which isa non-revenue generating entity at the moment, the ongoing construction of the new Forza manufacturing facility and investments in molds for new boat designs.
Previous wording
We believe that our cash, cash equivalents, and marketable securities will provide sufficient resources to finance operations for the next 24 months from the date of the filing of this Quarterly Report on Form 10-Q. In addition to cash, cash equivalents, and marketable securities, we anticipate that we will be able to rely, in part, on cash flows from operations in order to meet our liquidity and capital expenditure needs in the next year. We 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 public offerings, and certain grant funding, provided the conditions to receipt of the grant funding are met, of which there can be no assurance.
Current wording
We believe that our cash, cash equivalents, and marketable securities will provide sufficient resources to finance operations for the next 24 months from the date of the filing of this Quarterly Report on Form 10-Q. In addition to cash, cash equivalents, and marketable securities, we anticipate that we will be able to rely, in part, on cash flows from operations in order to meet our liquidity and capital expenditure needs in the next year. We expect Forza’s expenses to decrease ss it curtails its operation and the construction of its planned manufacturing facility in McDowell, North Carolina, the cost of which we expect will be paid for through the proceeds of Forza’s public offerings, provided the conditions to receipt of the grant funding are met, of which there can be no assurance.
Previous wording
For the three months ended March 31, 2024, net cash flows used in operating activities was $1,749,920 compared to $2,232,650 during the three months ended March 31, 2023. This use of case was due primarily to a $2,335,194 net loss and a reduction in accounts payable, accrued liabilities and operating lease obligations partially offset by a $881,527 reduction in inventory levels and depreciation and amortization of $425,281 and stock-based compensation of $426,283 since December 31, 2023.
Current wording
For the six months ended June 30, 2024, net cash flows used in operating activities was $2,232,013 compared to $3,430,097 during the six months ended June 30, 2023. This use of cash was due primarily to a $6,854,390 net loss partially offset by a $448,182 reduction in net inventory levels and depreciation and amortization of $860,239, stock-based compensation of $744,026, and an impairment of property & equipment of $1,674,000 since December 31, 2023.
Previous wording
During the three months ended March 31, 2024, cash provided by investing activities was $1,476,448, due primarily to net sales of marketable securities partially offset by investments in property, plant and equipment. This compares to a use of cash in investing activities of $243,007 in the three months ended March 31, 2023.
Current wording
During the six months ended June 30, 2024, cash used in investing activities was $279,427, due primarily to net sales of marketable securities partially offset by investments in property, plant and equipment. This compares to a use of cash in investing activities of $655,669 in the six months ended June 30, 2023.
Previous wording
For the three months ended March 31, 2024, net cash used in financing activities was approximately $83,735 compared to net cash used in financing activities of $2,835 for the three months ended March 31, 2023.
Current wording
For the six months ended June 30, 2024, net cash used in financing activities was approximately $137,029 compared to net cash provided by financing activities of $6,921,886 in the six months ended June 30, 2023. primarily from the issuance of Forza common stock.
Previous wording
The Company’s revenue is derived primarily from the sale of boats, motors and trailers to its independent dealers. The Company recognizes revenue when obligations under the terms of a contract are satisfied and control over promised goods is transferred to the dealer. For the majority of sales, this occurs when the product is released to the carrier responsible for transporting it to a dealer. The Company typically receives payment within five business days of shipment. Revenue is measured as the amount of consideration it expects to receive in exchange for a product. The Company offers dealer incentives that include wholesale rebates, retail rebates and promotions,
Current wording
Our revenue is derived primarily from the sale of boats, motors and trailers to its independent dealers. We recognize revenue when obligations under the terms of a contract are satisfied and control over promised goods is transferred to the dealer. For the majority of sales, this occurs when the product is released to the carrier responsible for transporting it to a dealer. We typically receive payment within five business days of shipment. Revenue is measured as the amount of consideration it expects to receive in exchange for a product. We offer dealer incentives that include wholesale rebates, retail rebates and promotions,
Previous wording
floor plan reimbursement or cash discounts, and other allowances that are recorded as reductions of revenues in net sales in the statements of operations. The consideration recognized represents the amount specified in a contract with a customer, net of estimated incentives the Company reasonably expects to pay. The estimated liability and reduction in revenue for dealer incentives is recorded at the time of sale. Subsequent adjustments to incentive estimates are possible because actual results may differ from these estimates if conditions dictate the need to enhance or reduce sales promotion and incentive programs or if dealer achievement or other items vary from historical trends. Accrued dealer incentives are included in accrued liabilities in the accompanying consolidated balance sheets.
Current wording
floor plan reimbursement or cash discounts, and other allowances that are recorded as reductions of revenues in net sales in the statements of operations. The consideration recognized represents the amount specified in a contract with a customer, net of estimated incentives we reasonably expects to pay. The estimated liability and reduction in revenue for dealer incentives is recorded at the time of sale. Subsequent adjustments to incentive estimates are possible because actual results may differ from these estimates if conditions dictate the need to enhance or reduce sales promotion and incentive programs or if dealer achievement or other items vary from historical trends. Accrued dealer incentives are included in accrued liabilities in the accompanying consolidated balance sheets.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
The following table provides certain selected financial information for the periods presented:
Current report — wording carried from elsewhere
Net Sales and Cost of Sales
Current report — wording carried from elsewhere
Our net sales decreased by $7,398,683, or 44% to $9,603,164 for the six months ended June 30, 2024 from $17,001,847 for the six months ended June 30, 2023. This decrease was due to a decrease in the number of boats sold during the first half of 2024 and the mix of boats sold, including the addition of a monohull line of boats, which have a much lower average price than our dual-hull boats. The number of boats sold during the six months ended June 30, 2024 decreased xx% compared to the six months ended June 30, 2023.
Current report — wording carried from elsewhere
Salaries and wage related expenses decreased 35%, or $1,344,306 to $2,495,616 for the six months ended June 30, 2024, compared to $3,839,922 for the six months ended June 30, 2023. The majority of the decrease is due to reductions in staffing levels at Forza, as well as the staffing of Aquasport. Included in salaries and wage related expenses for the six months ended June 30, 2024 was stock-based compensation expense of $744,026, Forza’s portion of that expense being $476,956. In total, stock-based compensation expense decreased by $228,299 or 23.5% as compared to the prior year period.
Current report — wording carried from elsewhere
Depreciation and amortization expense increased by 71%, or $357,401 to $860,239 for the six months ended June 30, 2024, as compared to $502,838 for the six months ended June 30, 2023. This increase is due to the addition of fixed assets, primarily molds, to increase our production levels and throughput.
Current report — wording carried from elsewhere
Net loss for the six months ended June 30, 2024 was $6,854,390, as compared to $3,732,208 for the six months ended June 30, 2023, an increase of $3,122,182. Our electric segment, which does not generate any revenue at this time, incurred a loss of $3,999,391 for the six months ended June 30, 2024, related mostly to staffing costs and research and development. Our gas-powered segment incurred a loss of $2,848,776 for the six months ended June 30, 2024, due largely to the rapid decline in orders for new boats during the first half of 2024. Basic and dilutive loss per share of common stock for the six months ended June 30, 2024 was ($0.49), as compared to ($0.26) for the six months ended June 30, 2023.