Twin Vee PowerCats Co

Previous wording

We are a designer, manufacturer and marketer of recreational and commercial power boats. We believe our company has been an innovator in the recreational and commercial power catamaran industry. We currently have 13 gas-powered models in production ranging in size from our 20-foot mono hull, single engine, center console to our newly designed 40-foot offshore 400 GFX catamaran, quad engines. While our twin-hull catamaran running surface, known as a symmetrical catamaran hull design, adds to the Twin Vee ride quality by reducing drag, increasing fuel efficiency, and offering users a stable riding boat, our new mono hull line addresses the largest portion of the overall market.

Current wording

We are a designer, manufacturer and marketer of recreational and commercial power boats. We believe our company has been an innovator in the recreational and commercial power catamaran industry. We currently have 13 gas-powered models in production ranging in size from our 22-foot mono hull, single engine, center console to our newly designed 40-foot offshore 400 GFX catamaran, quad engines. While our twin-hull catamaran running surface, known as a symmetrical catamaran hull design, adds to the Twin Vee ride quality by reducing drag, increasing fuel efficiency, and offering users a stable riding boat, our new mono hull line addresses the largest portion of the overall market.

Previous wording

We have organized our business into three operating segments: (i) our gas-powered boat segment which manufactures and distributes gas-powered boats under the Twin Vee and AquaSport names; (ii) our electric-powered boat segment which is developing fully electric boats, through our publicly 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.

Current wording

Historically, we have organized our business into three operating segments: (i) our gas-powered boat segment which manufactures and distributes gas-powered boats under the Twin Vee and AquaSport names; (ii) our electric-powered boat segment which is developing fully electric boats, through our publicly 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. Inasmuch as we determined to discontinue and wind down Forza’s business related to the development and sale of electric boats utilizing its proprietary outboard electric motor, we do not anticipate having an electric boat segment in the future.

Previous 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.

Current wording

During the third quarter of 2024, we have continued to experience a significant reduction in demand for our products, as has been experienced throughout the boating industry. Total units sold in the quarter were 20 compared to 66 in the third quarter of 2023, a 70% reduction, compared to a 64% reduction in revenue over the same period. This difference is due to the average selling price per unit in each quarter. Sales per unit for the third quarter of 2024 was approximately $145,065 compared to $122,371 the prior year quarter as the company has focused more on larger boats in the current year. The 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

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.

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 determined to discontinue and wind down its business related to the development and sale of electric boats utilizing its proprietary outboard electric motor.

Previous wording

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 wording

On July 12, 2024, Karl Zimmer was appointed as our President.

Previous wording

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 wording

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 by our shareholders of the issuance of our shares of common stock to the Forza stockholders, (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 Merger illegal. Each party’s obligation to complete the Merger 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.

Previous wording

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 wording

The Merger Agreement contains certain termination rights for both Forza and the Company. In addition, either the Company or Forza may terminate the Merger Agreement if the Merger is not consummated by December 1, 2024. On November 11, 2024, we held our 2024 Annual Meeting of Stockholders (the “Annual Meeting”). At the Annual Meeting, our stockholders approved the issuance of shares of our common stock to Forza stockholders pursuant to the terms of the Merger Agreement. We believe that all closing conditions will be met and anticipate consummating the Merger in the near future.

Previous 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.

Current wording

Our net sales decreased by $5,175,227, or 64% to $2,901,318 for the three months ended September 30, 2024 from $8,076,545 for the three months ended September 30, 2023. This decrease was due to a decrease in the number of boats sold during the three months ended September 30, 2024 and the mix of boats sold. The number of boats sold during the three months ended September 30, 2024 decreased 70% compared to the three months ended September 30, 2023.

Previous 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.

Current wording

During the three months ended September 30, 2024 and 2023, operating expenses were $2,843,573 and $3,384,934, respectively. Operating expenses as a percentage of sales was 98.0% compared to 41.9% in the prior year. Operating expenses, for the gas-powered boat segment, for the three months ended September 30, 2024 and 2023 were $1,990,512 and $2,124,980, respectively. As a percentage of net sales, for the three months ended September 30, 2024 and 2023, operating expenses for our gas-powered segment were 68.6% and 26.4%, respectively. Our total operating expenses for Forza, our electric powered boat and development segment, for the three months ended September 30, 2024 and 2023 were $852,451 and $1,258,966, respectively.

Previous wording

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 wording

Salaries and wage related expenses decreased 34%, or $586,366 to $1,145,568 for the three months ended September 30, 2024, compared to $1,731,934 for the three months ended September 30, 2023. The majority of the decrease is due to reductions in staffing levels at Forza. Included in salaries and wage related expenses for the three months ended September 30, 2024 was stock-based compensation expense of $278,867, Forza’s portion of that expense being $174,159. In total, stock-based compensation expense decreased by $185,693 or 40% as compared to the prior year period.

Previous wording

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 wording

Research and development expenses increased by $25,536 to $89,403 for the three months ended September 30, 2024, from $63,867 for the three months ended September 30, 2023. This increase was due primarily to the charges for an inventory allowance related to R&D inventory at Forza, partially offset by lower R&D activity.

Previous 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.

Current wording

Professional fees increased by 51% or $140,961 to $403,387 for the three months ended September 30, 2024, compared to $262,426 for the three months ended September 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 and the Merger between Twin Vee and Forza.

Previous 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.

Current wording

Depreciation and amortization expense increased by 29%, or $98,632 to $440,458 for the three months ended September 30, 2024, as compared to $341,826 for the three months ended September 30, 2023. This increase is due to the addition of fixed assets, primarily molds, to increase our production levels and throughout.

Previous 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.

Current wording

Net loss for the three months ended September 30, 2024 was $3,009,907, as compared to $2,444,009 for the three months ended September 30, 2023, an increase in loss of $565,898. Our electric segment, which did not generate any revenue at this time, incurred a loss of $895,702 for the three months ended September 30, 2024, related mostly to staffing costs and professional fees. Our gas-powered segment incurred a loss of $2,113,800 for the three months ended September 30, 2024, due largely to the rapid decline in orders for new boats during 2024. Basic and dilutive loss per share of common stock for the three months ended September 30, 2024 was ($0.26), as compared to ($0.20) for the three months ended September 30, 2023.

Previous wording

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 wording

Our net sales decreased by $12,476,420, or 50% to $12,504,482 for the nine months ended September 30, 2024 from $24,980,902 for the nine months ended September 30, 2023. This decrease was due to a decrease in the number of boats sold during the first nine months of 2024 and the mix of boats sold. The number of boats sold during the nine months ended September 30, 2024 decreased 61% compared to the nine months ended September 30, 2023.

Previous wording

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 wording

Gross profits decreased by $2,178,813 or 89% to $333,996 for the nine months ended September 30, 2024 from $3,052,809 for the nine months ended September 30, 2023. Gross profit as a percentage of sales, for the nine months ended September 30, 2024 and 2023, was 2.7% and 12.2% 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 50% over the same period last year. We continue to right size the workforce and drive efficiency in all parts of our cost structure.

Previous wording

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 wording

During the nine months ended September 30, 2024, operating expenses were $10,525,509 and included an impairment charge of $1,674,000 related to the Forza impairment of property & equipment in the second quarter of 2024. Before the impact of this charge, operating expenses for the nine months ended September 30, 2024 and 2023 were $8,851,509 and $11,245,982, respectively, and as a percentage of sales were 70.8% compared to 45.0% in the prior year. Our total operating expenses for our gas-powered boat segment, for the nine months ended September 30, 2024 and 2023 were $5,469,191 and $11,192,837, respectively, and as a percentage of revenues were 43.7% and 44.8%, respectively. Our total operating expenses for Forza, our electric powered boat and development segment, for the nine months ended September 30, 2024 and 2023 were $5,054,781 and $4,917,498, respectively.

Previous wording

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 wording

Selling, general, and administrative expenses decreased by approximately 24.2%, or $706,846 to $2,214,670 for the nine months ended September 30, 2024, compared to $2,921,516 for the nine months ended September 30, 2023. The largest drivers of the decrease were reductions in sales and marketing expenses, hiring costs and office supplies, primarily resulting from the decline in R&D activity at Forza between periods.

Previous 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.

Current wording

Salaries and wage related expenses decreased 34.7%, or $1,930,671 to $3,641,185 for the nine months ended September 30, 2024, compared to $5,571,856 for the nine months ended September 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 nine months ended September 30, 2024 was stock-based compensation expense of $1,022,894, Forza’s portion of that expense being $651,115. In total, stock-based compensation expense decreased by $413,991 or 28.8% as compared to the prior year period.

Previous wording

R&D activity in the Forza electric motor segment.

Current wording

Research and development expenses decreased by $346,619, or 37.3%, to $583,878 for the nine months ended September 30, 2024, from $930,497 for the nine months ended September 30, 2023. This decrease was due primarily to lower R&D activity in the Forza electric motor segment.

Previous wording

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 wording

Depreciation and amortization expense increased by 54%, or $456,032 to $1,300,697 for the nine months ended September 30, 2024, as compared to $844,665 for the nine months ended September 30, 2023. This increase is due to the addition of fixed assets, primarily building additions and molds, to increase our production levels and support and throughput.

Previous wording

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.

Current wording

Other income decreased by $1,689,741 to $327,215 for the nine months ended September 30, 2024, as compared to $2,016,956 for the nine months ended September 30, 2023. This decrease was due primarily to the first half of 2023 recognition of income from the Employee Retention Credit of $1,267,055 and a reduction in income generating investment amounts.

Previous wording

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.

Current wording

Net loss for the nine months ended September 30, 2024 was $9,864,298, as compared to $6,176,217 for the nine months ended September 30, 2023, an increase in the net loss of $3,688,081. Our electric segment, which did not generate any revenue, incurred a loss of $4,846,882 for the nine months ended September 30, 2024, related mostly to staffing costs and research and development. Our gas-powered segment incurred a loss of $4,962,576 for the nine months ended September 30, 2024, due largely to the rapid decline in orders for new boats during the first nine months of 2024. Basic and dilutive loss per share of common stock for the nine months ended September 30, 2024 was ($0.75), as compared to ($0.46) for the nine months ended September 30, 2023.

Previous 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.

Current wording

A primary source of funds for the year ended December 31, 2023 and through September 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, we have been reducing inventory levels. Our priority over the next several months is to continue to reduce production costs and labor to match market demand, complete the Twin Vee facility expansion and efficiency project, complete the addition of a wire harness assembly cell, continue to expand the Twin Vee GFX 2 lineup, and develop and introduce a new Twin Vee BayCat line of boats, which will require additional investment in molds and machinery.

Previous 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.

Current wording

As of September 30, 2024, we had $11,357,892 of cash, cash equivalents, and restricted cash, total current assets of $15,356,981 and total assets of $30,140,476. Our total liabilities were $6,932,265. Our total liabilities were comprised of current liabilities of $3,843,294 which included accounts payable and accrued liabilities of $3,153,884, leases liability of $651,235, contract liability of $38,175 and long-term liabilities of $3,088,971. 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 $18,247,096 as of June 30, 2024 compared to accumulated deficit of $14,346,984 as of December 31, 2023.

Current wording

The accumulated deficit was $21,491,078 as of September 30, 2024 compared to accumulated deficit of $14,346,984 as of December 31, 2023.

Previous 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.

Current wording

Our working capital decreased by $10,894,286 to $11,535,687 as of September 30, 2024, compared to $22,429,972 on December 31, 2023 primarily due to continued development efforts at Forza which was a non-revenue generating entity, the ongoing construction of the new manufacturing facilities in North Carolina and Ft. Pierce, Florida, 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 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.

Current wording

We believe that our cash and cash equivalents 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 and cash equivalents, 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 as it curtails its operation and the potential sale of its partially constructed 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 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.

Current wording

For the nine months ended September 30, 2024, net cash flows used in operating activities was $4,638,887 compared to $6,930,130 during the nine months ended September 30, 2023. The use of cash for the nine months ended September 30, 2024 was due primarily to a $9,864,298 net loss partially offset by a $1,591,390 reduction in net inventory levels and depreciation and amortization of $1,300,697, stock-based compensation of $1,022,894, and an impairment of property & equipment of $1,674,000 since December 31, 2023. For the nine months ended September 30, 2023, net cash flows used in operating activities was $6,930,130. We increased inventory levels by $4,126,506, due to opening the AquaSport production facility and adding two additional engine suppliers. Accounts receivable increased by $494,339, and accounts payable increased by $1,568,127. Our accrued expenses decreased by $275,255 and prepaid expenses decreased by $332,142. Our net loss from operation was $6,176,217, and was decreased by non-cash expenses of $2,591,485, the largest of these being stock-based compensation of $1,436,885, change of right-of-use asset and leases liabilities of $355,519, and depreciation of $844,665.

Previous 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.

Current wording

During the nine months ended September 30, 2024, cash used in investing activities was $567,889, 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 $11,061,664 in the nine months ended September 30, 2023 resulting from the investment of cash received from the Forza stock issuance into marketable securities and the purchase of property and equipment.

Previous 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.

Current wording

For the nine months ended September 30, 2024, net cash used in financing activities was approximately $190,565 from finance lease obligations compared to net cash provided by financing activities of $6,892,338 in the nine months ended September 30, 2023, primarily from the issuance of Forza common stock.

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 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.

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, 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 expect 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.