What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-12 compared with 2022-05-12 · 433 added, 303 removed, 27 unchanged (96% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

should read the following discussion and analysis of our financial condition and results of operations together with our financial statements

and related notes included in this Quarterly Report on Form 10-Q.

The following discussion contains forward-looking statements that

involve risks and uncertainties.

See “Forward-Looking Statements.” Our actual results and the timing of certain events could

differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those discussed

below and elsewhere in this Quarterly Report on Form 10-Q.

This discussion should be read in conjunction with the accompanying unaudited

condensed consolidated financial statements and notes thereto.

You should also review the disclosure under the heading “Risk Factors”

in this Quarterly Report on Form 10-Q and under Part 1, Item 1A of our Annual Report on Form 10-K

for the year ended December 31, 2021 for a discussion of important factors that could cause our actual results to differ materially

from those anticipated in these forward-looking statements.

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 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.

Our twin-hull catamaran running surface, known

as a symmetrical catamaran hull design, adds to the Twin Vee ride quality by reducing drag, increasing fuel efficiency, and offering

users a stable riding boat.

Twin Vee’s home base operations in Fort Pierce Florida is a 7.5-acre facility with several buildings

totaling over 75,000 square feet.

We employed approximately 140 people on March 31, 2022, some of whom have been with our company for

over twenty years.

have organized our business into three operating segments:

(i) our gas-powered boat segment which manufactures and distributes gas-powered

(ii) our electric-powered boat segment which is developing fully electric boats, through our wholly 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.

gas-powered boats allow consumers to use them for a wide range of recreational activities including fishing, diving and water skiing

and commercial activities including transportation, eco tours, fishing and diving expeditions.

We believe that the performance, quality

and value of our boats position us to achieve our goal of increasing our market share and expanding the power catamaran boating market.

We currently primarily sell our boats through a current network of 20 independent boat dealers in 25 locations across North America and

the Caribbean who resell our boats to the end user Twin Vee customers.

We continue recruiting efforts for high quality boat dealers and

seek to establish new dealers and distributors domestically and internationally to distribute our boats as we grow our production and

introduce new models.

Our gas-powered boats are currently outfitted with gas-powered outboard combustion engines.

to the growing demand for sustainable, environmentally friendly electric and alternative fuel commercial and recreational vehicles, our

wholly owned subsidiary, Forza X1, Inc., is designing and developing a line of electric-powered catamaran boats ranging in size from

18-feet to 28-feet.

Forza’s initial two models, the FX1 Dual Console and FX1 Center Console, are being designed to be 24-foot in

length, have an 8’ beam or width and utilize a catamaran hull surface to reduce drag and increase run times.

The initial launch

of FX1 will include our proprietary single electric outboard motor.

Our electric boats are being designed as fully integrated electric

boats including the hull, outboard motor and control system.

To date, we have completed the design of the hull and running surface of

the boat and have begun tooling the molds which are required to build the physical fiberglass boat, we have entered into a supply agreement

for the supply of the lithium battery packs that we plan to use to power the electric boats, completed the design and prototyping of

the boat control system, and completed the design and are more than halfway through prototyping of the electric outboard motor.

to begin production of our FX1 fully integrated electric boat and motor and commence selling to end user customers by the second quarter

We have also filed three design and four utility patent applications with the U.S.

Patent and Trademark Office relating to,

among other things, our propulsion system being developed and boat design.

the first quarter of 2022, we continue to experience strong demand for our products.

Our company objective is 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

For the first three months ended March 31, 2022, we increased our manufacturing throughput to an average of 4 boats a week.

increase in production drove our net revenue up 83% compared to 19% for the three months ended March 31, 2021.

While driving our top

line net sales growth, we are also experiencing increased labor costs.

Our manufacturing process is labor intensive, and with the addition

of new models to our production line we have added staff and expanded our training program.

goal continues to increase production to 5 boats per week which has resulted in an increase in operating expenses.

More specifically,

our headcount has increased and is expected to further increase as we hired additional production employees and midlevel managers resulting

in higher salaries and wages.

We continue focus on hiring highly qualified production and administrative staff to order to increase our

productivity, drive efficiencies, and improve product quality.

To help meet our production objectives we have also invested approximately

$2.5 million in facility upgrades, capital equipment and molds.

we move forward into the second quarter of 2022, we anticipate our operating income to be moderate toward breakeven for our core gas

powered boat segment, however our electric boat division will continue to incur losses as we continue our research and development efforts.

of Operations

of the Three Months Ended March 31, 2022 and 2021

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

MANAGEMENT’S DISCUSSION AND

ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis

of our financial condition and results of operations together with our financial statements and related notes included in this Quarterly

Report on Form 10-Q.

The following discussion contains forward-looking statements that involve risks and uncertainties.

See “Forward-Looking

Statements.” Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking

statements as a result of certain factors, including those discussed below and elsewhere in this Quarterly Report on Form 10-Q.

This discussion

should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and notes thereto.

also review the disclosure under the heading “Risk Factors” in this Quarterly Report on Form 10-Q and

under Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of important factors

that could cause our actual results to differ materially from those anticipated in these forward-looking statements.

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

We 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.

Our twin-hull catamaran running surface, known as a symmetrical catamaran hull design, adds to the

Twin Vee ride quality by reducing drag, increasing fuel efficiency, and offering users a stable riding boat.

Twin Vee’s home base

operations in Fort Pierce Florida is a 7.5-acre facility with several buildings totaling over 75,000 square feet.

We employed approximately

160 people on June 30, 2022, some of whom have been with our company for over twenty years.

We have organized our business into three operating

(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 wholly owned subsidiary, Forza X1, Inc., a Delaware corporation (“Forza”)

and (iii) our franchise segment which is developing a standard product offering and will be selling franchises across the United States

through our wholly owned subsidiary, Fix My Boat, Inc., a Delaware corporation.

Our gas-powered boats allow consumers to use them

for a wide range of recreational activities including fishing, diving and water skiing and commercial activities including transportation,

eco tours, fishing and diving expeditions.

We believe that the performance, quality and value of our boats position us to achieve our

goal of increasing our market share and expanding the power catamaran boating market.

We currently primarily sell our boats through a

current network of 20 independent boat dealers in 25 locations across North America and the Caribbean who resell our boats to the end

user Twin Vee customers.

We continue recruiting efforts for high quality boat dealers and seek to establish new dealers and distributors

domestically and internationally to distribute our boats as we grow our production and introduce new models.

Our gas-powered boats are

currently outfitted with gas-powered outboard combustion engines.

Due to the growing demand for sustainable, environmentally

friendly electric and alternative fuel commercial and recreational vehicles, our wholly owned subsidiary, Forza X1, Inc., is designing

and developing a line of electric-powered catamaran boats ranging in size from 18-feet to 28-feet.

Forza’s initial two models, the

FX1 Dual Console and FX1 Center Console, are being designed to be 24-foot in length, have an 8’ beam or width and utilize a catamaran

hull surface to reduce drag and increase run times.

The initial launch of FX1 will include our proprietary single electric outboard motor.

Our electric boats are being designed as fully integrated electric boats including the hull, outboard motor and control system.

we have completed the design of the hull and running surface of the boat and have begun tooling the molds which are required to build

the physical fiberglass boat, we have entered into a supply agreement for the supply of the lithium battery packs that we plan to use

to power the electric boats, completed the design and prototyping of the boat control system, and completed the design and are more than

halfway through prototyping of the electric outboard motor.

We expect to begin production of our FX1 fully integrated electric boat and

motor and commence selling to end user customers by the second quarter of 2023.

We have also filed three design and four utility patent

applications with the U.S.

Patent and Trademark Office relating to, among other things, our propulsion system being developed and boat

Through the first six months of 2022, we continued

to experience strong demand for our products.

Our company’s objectives have been to add new, larger boat models to our GFX lineup,

expand our dealers and distribution network, and increase unit production to fulfill our customer and dealer orders.

We have made significant

progress on all fronts in the first six months ended June 30, 2022, we started production on our new 260GFX and we unveiled our 400GFX

at our dealer meeting in July of 2022, we have added 20 dealers and 26 locations to our dealer network and we have increased our manufacturing

throughput to an average of 4.75 boats a week.

The increase in production drove our net revenue up 158% for the three months ended June

30, 2022 over the second quarter of 2021.

While net sales growth has been significant, the investments we are making also increases our

labor, operating, sales and general administration costs.

Our manufacturing process is labor intensive, and with the addition of new models

to our production line we have added staff and expanded our training program.

Our production of gas-powered boats since the closing

of our IPO in July 2021 has increased from one boat per week to the current 4.75 boats per week.

Our goal is to continue to increase production

of gas-powered boats to five boats per week.

This increase in production has, and will continue, to result in an increase in operating

More specifically, our headcount has increased and is expected to further increase as we hired and continue to hire additional

production employees and midlevel managers resulting in higher salaries and wages.

We continue to focus on hiring highly qualified production

and administrative staff to order to increase our productivity, drive efficiencies, and improve product quality.

To help meet our production

objectives we have also invested approximately $5 million in facility upgrades, capital equipment and molds.

As we move forward, we anticipate our operating income

to be moderate toward breakeven for our core gas-powered boat segment, however, our electric boat division will continue to incur losses

as we continue to develop our fully integrated electric boats, which includes research and development efforts.

Recent Developments

On July 28, 2022, Forza X1 received notice that the

North Carolina Economic investment committee has approved a Job Development Investment Grant (“JDIG”) providing for reimbursement

to Forza X1 of up to $1,367,100 over a twelve-year period of expenses Forza X1 incurs to establish a new manufacturing plant in McDowell

County, North Carolina.

The receipt of grant funding is conditioned upon Forza X1 investing over $10.5 million in land, buildings and

fixtures, infrastructure and machinery and equipment by the end of 2025 and Forza X1 creating as many as 170 jobs.

There can be no assurance

that Forza X1 will meet the conditions necessary to receive the grant funding.

Forza X1 is currently in negotiations for a new site to

build the Forza factory in North Carolina.

There can be no assurance that the negotiations will be successful.

On August 11, 2022, Forza X1 announced the pricing

of its initial public offering of 3,000,000 shares of its common stock at a public offering price of $5.00 per share, for aggregate gross

proceeds of $15,000,000 prior to deducting underwriting discounts and other offering expenses.

In addition, Forza X1 has granted the underwriters

a 45-day option to purchase up to an additional 450,000 shares of common stock at the public offering price less discounts, to cover over-allotments.

The initial public offering is scheduled to close on August 16, 2022, subject to customary closing conditions.

Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021

The following table provides certain selected financial information for

the periods presented:

Three Months Ended

2 unchanged sentences

(Loss) Income from operations

Other (expense) income

Net (loss) income

Basic and dilutive income per share of common stock

Weighted average number of shares of common stock outstanding

Net Sales and Cost Sales

Our net sales increased $5,222,042, or 158% to $8,519,613 for the

three months ended June 30, 2022 from $3,297,571 for the three months ended June 30, 2021.

This increase was due to an increase in the

number of boats sold during the three months ended June 30, 2022.

The number of our boats sold during the three months ended June 30,2022

increased 90% over the three months ended June 30, 2021, due to our increased production plan, enabling us to produce more boats during

Additionally, we have increased our sale prices and reduced discounts and rebates, to help offset the increases in operating

expenses described below, in addition to increased costs of product parts and components and our increased inventory that we are maintaining

to protect against supply chain shortages.

Gross profits increased by $2,131,068, or 162% to

$3,447,212 for the three months ended June 30, 2022 from $1,316,144 for the three months ended June 30, 2021.

Gross profit as a percentage

of sales, for the three months ended June 30, 2022 and 2021 was 41% and 40% respectively.

In the second quarter of 2021, demand for our

product was just starting to strengthen after the initial impacts of COVID-19, additional discounts were offered to stimulate sales, which

impacted our gross profit in the period ending June 30, 2021.

Total Operating Expenses

Our total operating expenses for the three months

ended June 30, 2022 and 2021 were $3,919,191 and $1,433,077 respectively.

Operating expenses as a percentage of sales were 46% compared

to 43% in the prior year.

Selling, general and administrative expenses increased

by approximately 126%, or $359,568 to $637,744 for the three months ended June 30, 2022, compared to $278,176 for the three months ended

June 30, 2021.

The majority of that increase resulted from expenses totaling $183,043 incurred from being publicly traded company, which

we did not incur in the prior period.

Directors and officers’ insurance, filing fees, board fees and investor relations are some

of these expenses.

We also incurred increases in repairs and maintenance, insurance, hiring expenses, and travel totaling approximately

$120,000 along with numerous other smaller increases.

Salaries and wages related expenses increased by approximately

167%, or $1,746,037 to $2,793,281 for the three months ended June 30, 2022, compared to $1,047,244 for the three months ended June 30,

The increase in salaries and wages of $1,260,339 was the result of aggressively ramping up of production, which required increasing

our production staff and adding mid-level staff.

Included in salaries and wage related expenses for the three months ended June 30, 2022

was stock based compensation expense of $302,000 due to the issuance of options to employees.

We have added a full package of benefits

for our employees, in order to retain our quality employees, which resulted in an increase in salaries and wages of $103,000.

The remaining

increase in salaries and wages during the three months ended June 30, 2022 is associated with taxes.

Research and design expenses increased by $174,807

to $174,807 for the three months ended June 30, 2022, from $0 for the three months ended June 30, 2021.

Part of the use of proceeds from

our IPO, was the development of an electric boat and an electric motor.

Professional fees increased by 264%, or $140,360 to

$193,542 for the three months ended June 30, 2022, compared to $53,182 for the three months ended 2021.

This increase was also due to

the additional costs we incurred associated with being public.

We engaged the services of an outside financial consultant, as well as

an audit firm for quarterly reporting and SEC legal counsel to fulfill our public company reporting obligations.

Depreciation expense increased by 120%, or $65,342

to $119,817 for the three months ended June 30, 2022, compared to $54,475 for the three months ended 2021.

This increase is due to the

addition of fixed assets, primarily molds, to increase our production levels and throughput.

Our other (expenses) increased by 140%, or $234,587

to an expense of $66,803 for the three months ended June 30, 2022, compared to income of $167,784 for the three months ended, 2021.

2021 we had a net gain from insurance recoveries of $185,225, which we did not receive in 2022.

Our interest expense increased by $26,275

and our net change in fair value of marketable securities was $27,038, compared to $0, in 2021.

Net loss for the three months ended June 30, 2022 was $538,782, compared

to net income for the three months ended June 30, 2021 of $50,851.

Our electric segment, which does not generate any revenue, at this

time, incurred a loss of $599,931, for the three months ended June 30, 2022, related to research and design..

Basic and dilutive loss

per share of common stock for the three months ended June 30, 2022, was ($0.08) compared to basic and diluted income per share for the

three months ended June 30, 2021 of $0.01.

Comparison of the Six Months Ended June 30, 2022 and 2021

Six Months Ended

Cost of products sold

Operating expenses

(Loss) income from operations

$ (1,520,132 )

$ (1,557,961 )

Other expense

Other (expense) income

Net (loss) income

3 unchanged sentences

Weighted average number of shares of common stock outstanding

Sales and Cost Sales

net sales increased $2,678,357, or 83% to $5,886,000 for the three months ended March 31, 2022 from $3,207,643 for the three months ended

March 31, 2021.

This increase was due to an increase in the number of boats sold during the three months ended March 31, 2022.

of our boats produced and sold during the three months ended March 31, 2022 increased 48% over the three months ended March 31, 2021,

due to our production plan, which we continue to implement and refine, enabling us to produce more boats during the quarter.

Additionally,

we have increased our sale prices to help offset the increases in operating expenses, which includes increased labor cost, described

below, as well as increased costs of production supplies.

Our average revenue per unit for the three months ended March 31, 2022 is up

approximately 21% over revenue per unit for the three months ended March 31, 2021.

The average revenue per unit increase is due to an

increase in boat pricing and a shift in product mix with higher margins.

We discontinued our classic models and replaced them with our

GFX models which generate more revenue per unit.

profits increased by $946,448, or 64% to $2,434,354 for the three months ended March 31, 2022 from $1,487,906 for the three months ended

March 31, 2021.

Gross profit as a percentage of sales for the three months ended March 31, 2022 and 2021 was 41% and 46% respectively.

We attribute the decline in gross profit percentage to increased cost of raw materials and purchased components.

We anticipate continued

pressure on our gross profit percentage due to price increases on raw materials and purchased components.

Operating Expenses

total operating expenses for the three months ended March 31, 2022 and 2021 were $3,482,507 and $1,333,144 respectively.

Net Sales and Cost Sales

Our net sales increased by $7,900,399, or 121% to $14,405,613 for the six

months ended June 30, 2022 from $6,505,214 for the six months ended June 30, 2021.

We attribute the large increase due to strong demand

for our product, coupled with our increase in production.

The number of our boats sold during the six months ended June 30, 2021 increased

70% over the number of our boats sold during the six months ended June 30, 2021, due to our increased production plan that we focused

on since the third quarter of 2021.

Additionally, we have increased our sale prices and reduced discounts and rebates, to help offset

the increases in operating expenses described below, in addition to increased costs of product parts and components and our increased

inventory that we are maintaining to protect against supply chain shortages.

Our average revenue per unit for the six months ended June

30, 2022 is up approximately 17% over revenue per unit for the six months ended June 30, 2021.

Gross profit increased by $3,077,516 or 110% to 5,881,566

for the six months ended June 30, 2022 from $2,804,050 for the six months ended June 30, 2021.

Gross profit as a percentage of net sales

for the six months ended June 30, 2022, was 41% as compared to 43% for the same period in fiscal 2021.

Total Operating Expenses

Our total operating expenses increased by $4,635,477,

or 168% to $7,401,698 for the six months ended June 30, 2021 from $2,766,221 for the six months ended June 30, 2021.

Operating expenses

as a percentage of sales were 59% compared to 42% in the prior year.

general and administrative expenses increased by approximately 128%, or $382,896 to $682,321 for the three months ended March 31, 2022,

compared to $299,425 for the three months ended March 31, 2021.

The large portion of the increase resulted from expenses totaling $236,896

incurred from being publicly traded company, which we did not incur in the prior year including, directors and officers insurance, filing

fees, legal expenses and investor relations costs.

We incurred significant increases in our liability insurance and workers compensation

insurance totaling $51,498, an increase of 142%, due to our increased revenue levels and increased wages.

Office related expenses increased

$39,435 or 125%, due to increased staffing levels and work volume.

We also saw an increase in travel related expenses of $26,674 or 449%,

due to our Forza segment for research and design efforts.

Other miscellaneous items make up the remaining $28,393 of increased selling,

general and administrative expense.

wages and other compensation expenses increased by approximately 143%, or $1,325,640 to $2,253,810 for the three months ended March 31,

2022, compared to $928,170 for the three months ended March 31, 2021.

Total salaries and wages increased by $888,933 as a result of aggressively

ramping up of production, which required increasing our production and mid-level staff.

Included in salaries and wages for the three

months ended March 31, 2022 was a charge for non-cash stock-based compensation expense of $224,832 due to the issuance of options to

employees and consultants.

As we have grown as an organization, we have added benefits to maintain a competitive workforce by adding

paid time off, a 401K program, paid holidays and health insurance, which resulted in increased expenses of $92,601.

We have also incurred

production and executive bonus expense of $68,419 for the three months ended March 31, 2021 compared to $21,600 for the three months

ended March 31, 2021, an increase of $46,819, as a result of meeting our production first quarter production objectives.

Our compensation

to the Board of Directors for the three months ended March 31, 2022 and 2021 was $20,750 and $0, respectively.

During the first half

of 2021 we were not required to have a Board and did not incur the related expense.

The remaining increase, approximately $63,300 of

salaries and wages during the three months ended March 31, 2022 was associated with payroll taxes.

fees increased by 315%, or $185,713 to $244,739 for the three months ended March 31, 2022, compared to $59,026 for the year ended 2021.

This increase was primarily due to the additional costs we incurred associated with being a public company and included an increase in

audit, legal and related consulting fees in order to fulfill our public company SEC reporting obligations.

expense for the three months ended March 31, 2022 increased by 72%, or $33,569 to $80,092 for the three months ended March 31, 2022,

compared to $46,523 for the three months ended March 31, 2021.

Over the past year we made significant investments in equipment, leasehold

improvements and boat molds that resulted in an increased our depreciation expense.

and design expenses for the three months ended March 31, 2022, was $221,545 compared to $0, for the three months ended March 31, 2021.

These expenses are primarily associated with our development of our electric propulsion system for Forza X1.

expense increased by $120,351 to $143,164 for the three months ended March 31, 2022, compared to $22,813 for the three months ended,

The increase in other expense is primarily the result of $85,538 in net change in fair value of marketable securities.

expense increased $22,128 to $39,840, and we incurred a net of loss on disposal of assets of $18,408.

loss for the three months ended March 31, 2022 was $1,191,317, compared to net income of $131,949 for the three months ended March 31,

While our revenue levels increased, our expenses also increased as we continue to invest in our operations to improve production

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 the three months ended March 31, 2022.

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

Basic and dilutive loss per share of common stock for the three months ended March 31, 2022, ($0.17) compared to basic and

dilutive income per share of common stock for the three months ended March 31, 2021, $0.03.

and Capital Resources

primary source of funds for the three months ended March 31, 2022 was from cash from operation and use of proceeds from our IPO.

primary use of cash was related to increasing inventory levels to meet the high level of demand coupled with the current supply chain

With uncertainty on component availability, prolonged lead time and rising prices, we have been bringing in inventory far

earlier than in previous years.

following table provide selected financial data about us as of March 31, 2022 and December 31, 2021.

as a percentage of sales were 51% and 43% for the six months ended June 30, 2022, and 2021, respectively.

Selling, general and administrative expenses increased

by 127% or $732,553 to $1,320,065 for the six months ended June 30, 2022, from $577,601.

A significant portion of the increase, $366,600,

resulted from expenses incurred in connection with being a publicly traded company, which we did not incur in the prior period.

Our insurance

increased by $111,868 over the prior period, due to our increased wages and sales level.

Our Delaware state franchise taxes increased

Our travel expenses increased by $56,250.

We also have experienced moderate increases for office supplies, hiring expenses,

computer related expenses, and several other accounts which attributed to $123,625 of the increase.

Salaries and wage related expenses increased by

155% or $3,071,678 to $5,047,091 for the six months ended June 30, 2022 from $1,975,414 for the six months ended June 30, 2021.

have been aggressively working on increasing production, and this included increasing our production staff as well as adding

mid-level staff, resulting in an increase of $2,149,272 of additional salaries and wage expense for the six months ended June 30,

2022 as compared to for the six months ended June 30, 2021.

Included in salaries and wage related expenses for the six months ended

June 30, 2022 was stock based compensation expense of $526,723 due to the issuance of options to employees.

We have added a full

package of benefits for our employees, to retain our quality employees, which resulted in an increase of $181,085.

The remaining

increase of salaries and wages related expenses during the six months ended June 30, 2022 is associated with taxes and benefits.

Research and design expenses for the six months ended

June 30, 2022, and 2021 were $396,352 and $0, respectively.

Part of the use of proceeds from our IPO, was the development of an electric

boat and an electric motor.

Professional fees for the six months ended June 30,

2022 and 2021 were $438,281 compared to $112,208, respectively.

This increase is also due to the expenses incurred from being a public

We engaged the services of an outside financial consultant, as well as an audit firm for quarterly reporting and SEC legal counsel

in order to fulfill our public company reporting obligations.

Depreciation expenses for the six months ended June

30, 2022 and 2021 were $199,909 and $100,998, respectively.

This increase is due to the addition of fixed assets, primarily molds, to

increase our production levels and throughput.

Our other expenses increased by 245%, or $354,937

to $209,967 for the six months ended June 30, 2022, compared to other income of $144,971 for the six months ended June 30, 2021.

of the increase was due to a net gain from insurance recoveries of $180,124, in 2021, which we did not receive in 2022, an increase in

interest expense of $48,403 and our net loss in fair value of marketable securities was $112,576 compared to $0, during the six months

ended June 30, 2021.

Net loss for the six months ended June 30, 2022 was $1,730,099, compared

to net income for the six months ended June 30, 2021 of $182,800.

Our electric segment, which does not generate any revenue, at this time,

incurred a loss of $1,114,222, for the six months ended June 30, 2022, related to research and design.

Our gas-powered segment incurred

a loss of $553,724, for the six months ended June 30, 2022.

This loss was due to our aggressive ramp up in production.

Basic and dilutive

loss per share of common stock for the six months ended June 30, 2022, was ($0.25) compared to basic and diluted income per share for

the six months ended June 30, 2021 of $0.05.

Liquidity and Capital Resources

The primary sources of funds for the six months ended

June 30, 2022 were cash from operations and proceeds from our IPO.

Our primary use of cash was related to increasing inventory levels

to meet the high level of demand coupled with the current supply chain challenges and our investment into our electric boat segment.

uncertainty on component availability, prolonged lead time and rising prices, we have been bringing in inventory far earlier than in previous

With our increased levels of inventory, increased revenues, and increased operating costs, we have also experienced an increase

in our accounts payable.

Our electric boat segment currently does not generate revenue, and incurred a loss of $1,114,222 for the six

months ended June 30, 2022.

To date, we have spent approximately $2,500,00 on the funding of the development

on our electric boats.

The proceeds expected to be derived from the initial public offering of the common stock of Forza X1, will be used

to build a manufacturing facility, purchase equipment, inventory and working capital.

The following table provides selected financial data

about us as of June 30, 2022 and December 31, 2021.

Cash and cash equivalents

$ (1,064,769 )

Marketable securities

$ (2,115,167 )

Current assets

1 unchanged sentence

Working capital

of March 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 Quarterly Report on Form 10-Q.

As of March 31, 2022, we had $11,039,423 of cash, cash equivalents and marketable securities,

total current assets of $12,606,264, and total assets of $20,501,774.

Our total liabilities were $4,768,559.

$ (2,573,541 )

As of June 30, 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 Quarterly Report on Form 10-Q.

of June 30, 2022, we had $9,859,463 of cash, cash equivalents and marketable securities, total current assets of $12,320,261, and total

assets of $21,019,907.

Our total liabilities were $5,523,582.

comprised of current liabilities of $3,122,630 which included accounts payable and accrued liabilities of $2,629,731, due to affiliated

companies of $115,043 and current portion of operating lease right of use liability of $377,856, and long-term liabilities of $1,645,929.

As of December 31, 2021, we had $13,039,399 of cash, cash equivalents and marketable securities, total current assets of $13,073,346

and total assets of $20,5995,184.

Our total current liabilities were $2,155,420 and total liabilities of $3,899,484 which included long-term

operating lease liabilities for the lease of our facility.

deficit was $3,208,873 as of March 31, 2022 compared to accumulated deficit of $2,017,556 as of December 31, 2021.

working capital decreased by $1,434,292 to $9,483,634 as of March 31, 2022, compared to $10,917,926 on December 31, 2021, due primarily

to increased accounts payable and accrued liabilities.

believe that our cash and cash equivalents will provide sufficient resources to finance operations for the next 12 months.

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 as well as proceeds from our initial public offering.

provided by (used in) operating activities

Our total liabilities were comprised of current liabilities of $3,975,876

which included accounts payable and accrued liabilities of $2,945,784, due to affiliated companies of $115,043 and current portion of

operating lease right of use liability of $382,922, and long-term liabilities of $1,547,706.

As of December 31, 2021, we had $13,039,399

of cash, cash equivalents and marketable securities, total current assets of $13,073,346 and total assets of $20,5995,184.

Our total current

liabilities were $2,155,420 and total liabilities of $3,899,484 which included long-term operating lease liabilities for the lease of

our facility.

Accumulated deficit was $3,747,655 as of June 30, 2022 compared to

accumulated deficit of $2,017,556 as of December 31, 2021.

Our working capital decreased by $2,573,542 to $8,344,384

as of June 30, 2022, compared to $10,917,926 on December 31, 2021, due primarily to increased accounts payable and accrued liabilities.

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 as well as proceeds from our IPO.

Six Months Ended

Cash (used in) provided by operating activities

$ (1,196,245 )

1 unchanged sentence

$ (2,312,187 )

Cash provided by (used in) investing activities

$ (8,037,264 )

used in investing activities

$ (7,836,812 )

provided by (used in) financing activities

Change in Cash

Cash (used in) provided by financing activities

$ (15,556,243 )

Net change in cash

$ (1,064,769 )

Flow from Operating Activities

the three months ended March 31, 2022, net cash flows used in operating activities was $1,149,673 compared to net cash provided by operating

activities of $189,898 during the three months ended March 31, 2021.

We have increased inventory levels by $1,413,413, due to supply

chain delays that continue to impact lead time and parts availability, this is further emphasized by our production ramp up.

payable increased $768,632, which is also associated with our increased bring in of inventory.

Our accrued liabilities increased $203,424,

primarily due to accrued rebate expense and accrued professional fees.

Our net loss from operation was $1,191,317, was decreased by non-cash

expenses of $597,649, primarily due to stock-based compensation of $224,832, change of right-of-use asset and lease liabilities of $93,106,

Cash Flow from Operating Activities

For the six months ended June 30, 2022, net cash flows

used in operating activities was $1,196,245 compared to net cash provided by operating activities of $5,045 during the six months ended

June 30, 2021.

We have increased inventory levels by $2,569,780, due to supply chain delays that continue to impact lead time and parts

availability, this is further emphasized by our production ramp up.

Accounts payable decreased $1,061,573.

Our accrued liabilities decreased

$226,537, primarily due to accrued rebate being paid out.

Our net loss from operation was $1,730,099, was decreased by non-cash expenses

of $1,078,845, primarily due to stock-based compensation of $526,723, change of right-of-use asset and lease liabilities of $189,647,

loss on disposal of assets of $49,990, net change in fair value of marketable securities of $112,576 and depreciation of $199,909.

Flow from Investing Activities

the three months ended March 31, 2022, we used $647,855 for investment activities, compared to $443,250 used during the three months

ended March 31, 2021.

We invested $728,371 in the purchase property and equipment, primarily for new model boat molds of approximately

$439,000, leasehold improvements of approximately $142,000, new production equipment of approximately $130,000, and new computers and

furniture of approximately $16,000.

We had proceeds from the sale of property of approximately $80,000.

Flows from Financing Activities

the three months ended March 31, 2022, net cash used by financing activities was approximately $116,394, compared to net cash provided

by financing activities of $457,866.

During the three months ended March 31, 2022, we used $116,394 for deferred offering cost relating

Cash Flow from Investing Activities

During the six months ended June 30, 2022, we provided

$273,105 in investment activities, compared to $604,990 used during the six months ended June 30, 2021.

We invested $1,809,486 in the

purchase of property and equipment, primarily for new model boat molds of approximately $1,076,604, leasehold improvements of approximately

$114,908, new production equipment of approximately $431,444, and new computers, software and furniture of approximately $59,411.

proceeds from the sale of property of approximately $80,000, and proceeds from the sale of marketable securities of $2,002,591.

Cash Flows from Financing Activities

For the six months ended June 30, 2022, net cash used by financing activities

was approximately $141,629, compared to net cash provided by financing activities of $114,771.

During the six months ended June 30, 2022,

we used $141,629 for deferred offering cost relating to Forza.

CRITICAL ACCOUNTING ESTIMATES

believe that several accounting policies are important to understanding our historical and future performance.

We refer to these policies

as “critical” because these specific areas generally require us to make judgments and estimates about matters that are uncertain

at the time we make the estimate, and different estimates—which also would have been reasonable—could have been used, which

would have resulted in different financial results.

management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial

statements, which have been prepared in accordance with U.S.

The preparation of our condensed consolidated financial statements

requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related

disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates based on historical experience and make

various assumptions, which management believes to be reasonable under the circumstances, which form the basis for judgments about the

carrying values of assets and liabilities that are not readily apparent from other sources.

Actual results may differ from these estimates

under different assumptions or conditions.

notes to our condensed consolidated financial statements contained herein contain a summary of our significant accounting policies.

consider the following accounting policies critical to the understanding of the results of our operations:

account for revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

Topic 606 which was adopted at the beginning of fiscal year 2018 using the modified retrospective method.

We did not recognize any cumulative-effect

adjustment to retained earnings upon adoption as the effect was immaterial.

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.

Customer deposits are recognized as revenue when control over promised goods is transferred to the customer.

preparation of financial statements in conformity with accounting principles generally accepted in the United States “U.S.

requires management to make estimates and assumptions that affect the amounts reported in the financial statements.

Actual results could

differ from those estimates.

Included in those estimates are assumptions about allowances for inventory obsolescence, useful life of

fixed assets, warranty reserves and bad-debt reserves.

are stated at the lower of cost or net realizable value using the first-in, first-out (FIFO) method.

Net realizable value is defined

as sales price less cost of completion, disposable and transportation and a normal profit margin.

Production costs, consisting of labor

and overhead, are applied to ending finished goods inventories at a rate based on estimated production capacity.

Excess production costs

are charged to cost of products sold.

Provisions have been made to reduce excess or obsolete inventories to their net realizable value.

of Long-Lived Assets

assesses the recoverability of its long-lived assets when indicators of impairment are present.

If such indicators are present, recoverability

of these assets is determined by comparing the undiscounted net cash flows estimated to result from those assets over the remaining life

to the assets’ net carrying amounts.

If the estimated undiscounted net cash flows are less than the net carrying amount, the assets

would be adjusted to their fair value, based on appraisal or the present value of the undiscounted net cash flows.

Warranty Costs

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

accrue for warranty costs based on the expected material and labor costs to provide warranty replacement products.

The methodology used

in determining the liability for warranty cost is based upon historical information and experience.

Our warranty reserve is calculated

as the gross sales multiplied by the historical warranty expense return rate.

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.

Topic 842, we applied a dual approach to all leases whereby we are a lessee and classify leases as either finance or operating leases

based on the principle of whether or not the lease is effectively a financed purchase by us.

Lease classification is evaluated at the

inception of the lease agreement.

Protection Program

GAAP does not contain authoritative accounting standards for forgivable loans provided by governmental entities to a for-profit entity.

Absent authoritative accounting standards, interpretative guidance issued and commonly applied by financial statement preparers allows

for the selection of accounting policies amongst acceptable alternatives.

Based on the facts and circumstances, the Company determined

it most appropriate to account for the Paycheck Protection Program (“PPP”) loan proceeds as an in-substance government grant

by analogy to International Accounting Standards 20 “(IAS 20)”, Accounting for Government Grants and Disclosure of

Government Assistance .

Under the provisions of IAS 20, “a forgivable loan from government is treated as a government grant

when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan.” IAS 20 does not define “reasonable

however, based on certain interpretations, it is analogous to “probable” as defined in FASB ASC Subtopic

450-20-20 under U.S.

GAAP, which is the definition we have applied to our expectations of PPP loan forgiveness.

Under IAS 20, government

grants are recognized in earnings on a systematic basis over the periods in which we recognize costs for which the grant is intended

to compensate (i.e., qualified expenses).

Further, IAS 20 permits for the recognition in earnings either (1) separately under a general

heading such as other income, or (2) as a reduction of the related expenses.

We have elected to recognize government grant income separately

within other income to present a clearer distinction in its financial statements between its operating income and the amount of net income

resulting from the PPP loan and forgiveness.

Income Taxes and Valuation Allowance

account for income taxes under ASC 740 “Income Taxes.” Under the asset and liability method of ASC 740, deferred tax assets

and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying

amounts of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are measured using enacted

tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs.

A valuation allowance is provided for certain deferred tax assets if it is more likely than not that we will not realize tax assets through

future operations .

SHEET ARRANGEMENTS

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

and Exchange Commission rules.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required

under this item.

We believe that several accounting policies are important

to understanding our historical and future performance.

We refer to these policies as “critical” because these specific areas

generally require us to make judgments and estimates about matters that are uncertain at the time we make the estimate, and different

estimates—which also would have been reasonable—could have been used, which would have resulted in different financial results.

Our management’s discussion and analysis of

financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in

accordance with U.S.

The preparation of our condensed consolidated financial statements requires us to make estimates and judgments

that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates based on historical experience and make various assumptions, which management believes

to be reasonable under the circumstances, which form the basis for judgments about the carrying values of assets and liabilities that

are not readily apparent from other sources.

Actual results may differ from these estimates under different assumptions or conditions.

The notes to our condensed consolidated financial

statements contained herein contain a summary of our significant accounting policies.

We consider the following accounting policies critical

to the understanding of the results of our operations:

Revenue Recognition

We account for revenue in accordance with Financial

Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 606 which was adopted at the

beginning of fiscal year 2018 using the modified retrospective method.

We 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 balance sheet.

Customer deposits are

recognized as revenue when control over promised goods is transferred to the customer.

Use of Estimates

The preparation of financial statements in conformity

with accounting principles generally accepted in the United States “U.S.

GAAP” requires management to make estimates and assumptions

that affect the amounts reported in the financial statements.

Actual results could differ from those estimates.

Included in those estimates

are assumptions about allowances for inventory obsolescence, useful life of fixed assets, warranty reserves and bad-debt reserves.

Inventories are stated at the lower of cost or net

realizable value using the first-in, first-out (FIFO) method.

Net realizable value is defined as sales price less cost of completion,

disposable and transportation and a normal profit margin.

Production costs, consisting of labor and overhead, are applied to ending finished

goods inventories at a rate based on estimated production capacity.

Excess production costs are charged to cost of products sold.

have been made to reduce excess or obsolete inventories to their net realizable value.

Impairment of Long-Lived Assets

Management assesses the recoverability of its long-lived

assets when indicators of impairment are present.

If such indicators are present, recoverability of these assets is determined by comparing

the undiscounted net cash flows estimated to result from those assets over the remaining life to the assets’ net carrying amounts.

If the estimated undiscounted net cash flows are less than the net carrying amount, the assets would be adjusted to their fair value,

based on appraisal or the present value of the undiscounted net cash flows.

Product Warranty Costs

As required by FASB ASC Topic 460, Guarantees ,

we are including the following disclosure applicable to our product warranties.

We accrue for warranty costs based on the expected

material and labor costs to provide warranty replacement products.

The methodology used in determining the liability for warranty cost

is based upon historical information and experience.

Our warranty reserve is calculated as the gross sales multiplied by the historical

warranty expense return rate.

We adopted FASB Accounting Standards Update (“ASU”)

2016-02, Leases (“Topic 842”), using the modified retrospective adoption method with an effective date

of January 1, 2019.

This standard requires all lessees to recognize a right-of-use asset and a lease liability, initially measured at

the present value of the lease payments.

Under Topic 842, we applied a dual approach to all

leases whereby we are a lessee and classify leases as either finance or operating leases based on the principle of whether or not the

lease is effectively a financed purchase by us.

Lease classification is evaluated at the inception of the lease agreement.

Paycheck Protection Program

GAAP does not contain authoritative accounting

standards for forgivable loans provided by governmental entities to a for-profit entity.

Absent authoritative accounting standards, interpretative

guidance issued and commonly applied by financial statement preparers allows for the selection of accounting policies amongst acceptable

alternatives.

Based on the facts and circumstances, the Company determined it most appropriate to account for the Paycheck Protection

Program (“PPP”) loan proceeds as an in-substance government grant by analogy to International Accounting Standards 20 “(IAS

20)”, Accounting for Government Grants and Disclosure of Government Assistance .

Under the provisions of IAS 20, “a

forgivable loan from government is treated as a government grant when there is reasonable assurance that the entity will meet the terms

for forgiveness of the loan.” IAS 20 does not define “reasonable assurance”;

however, based on certain interpretations,

it is analogous to “probable” as defined in FASB ASC Subtopic 450-20-20 under U.S.

GAAP, which is the definition we have applied

to our expectations of PPP loan forgiveness.

Under IAS 20, government grants are recognized in earnings on a systematic basis over the

periods in which we recognize costs for which the grant is intended to compensate (i.e., qualified expenses).

Further, IAS 20 permits

for the recognition in earnings either (1) separately under a general heading such as other income, or (2) as a reduction of the related

We have elected to recognize government grant income separately within other income to present a clearer distinction in its

financial statements between its operating income and the amount of net income resulting from the PPP loan and forgiveness.

Deferred Income Taxes and Valuation Allowance

We account for income taxes under ASC 740 “Income

Taxes.” Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences

attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in

which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change

in tax rates is recognized in income in the period the enactment occurs.

A valuation allowance is provided for certain deferred tax assets

if it is more likely than not that we will not realize tax assets through future operations .

OFF-BALANCE SHEET ARRANGEMENTS

We did not have during the periods presented, and we do not currently have,

any off-balance sheet arrangements, as defined under Securities and Exchange Commission rules.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK.

We are a smaller reporting company as defined by Rule 12b-2 of the

Exchange Act and are not required to provide the information required under this item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis